Advanced Accounting 12th Edition by Joe Ben Hoyle,Thomas Schaefer , Timothy Doupnik

Exercise 29

A subsidiary that has a net operating loss carryforward is acquired. The related deferred income tax asset is $230,000. Because the parent believes that a portion of this carryforward likely will never be used, it also recognizes a valuation allowance of $150,000. At the end of the first year of ownership, the parent reassesses the situation and determines that the valuation allowance should be reduced to $110,000. What effect does this change have on the business combination's reporting