Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 41

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