Question

To properly measure an asset on the balance sheet, any related valuation allowance should be reported A. Contra to the particular asset. B. As a deferred credit. C. As a liability. D. On the income statement.

Answer 1

Answer:

A) Contra to the particular asset.

Explanation:

A valuation allowance account is a reserve or contra account against deferred tax assets based on the likelihood that those assets will not be realized.

For example, a common valuation allowance account is Allowance for Doubtful Accounts which is a contra asset account of Accounts Receviable.