Valuation allowance Clause Samples
A valuation allowance clause establishes a reserve against certain assets, typically deferred tax assets, to reflect the likelihood that some or all of these assets may not be realized in the future. In practice, this clause requires a company to assess the recoverability of its tax benefits and, if it is more likely than not that some portion will not be utilized, to record a corresponding allowance that reduces the reported value of those assets. The core function of this clause is to ensure accurate financial reporting by preventing the overstatement of asset values and aligning reported figures with realistic expectations of future benefit.
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Valuation allowance. Net deferred tax asset...................................... (1,140) -------- (24,322) -------- (12,590) -------- $ -- ======== (885) ------- (2,123) ------- -- ------- $20,870 ======= During 2002 the Company recorded a valuation allowance of $12,590,000 against all of its United States and foreign net deferred tax assets. A valuation allowance has been recorded against deferred tax assets because the Company has determined that it is more likely than not that all of the deferred tax assets may not be realized. The Company incurred significant operating losses in 2002 and 2001 and the current outlook indicates that significant uncertainty will continue into 2003. These cumulative factors resulted in the Company's decision that it is more likely than not that all of its deferred tax assets may not be realized. If the Company generates sustained future taxable income against which these tax attributes may be applied, some MKS INSTRUMENTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (TABLES IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) portion or all of the valuation allowance would be reversed and a corresponding reduction in income tax expense would be reported in future periods. At December 31, 2002, MKS had approximately $25,700,000 of federal net operating losses including approximately $6,800,000 the utilization of which may be limited by the change in ownership rules under Section 382 of the Internal Revenue Code. In addition, at December 31, 2002, MKS also had approximately $41,400,000 of state net operating losses. The federal and state net operating losses begin to expire in 2009 and 2006, respectively. The Company does not provide for a U.S. income tax liability on undistributed earnings of its foreign subsidiaries. The earnings of non-U.S. subsidiaries, which reflect full provision for non-U.S. incomes taxes, are indefinitely reinvested in non-U.S. operations or will be remitted substantially free of additional tax. As of December 31, 2002, the unrecognized deferred tax liability associated with these unremitted earnings was approximately $2,500,000.
Valuation allowance. An adjustment in Profit and Loss Account in “cost of sales” should be made against inventory to ensure it is stated at the lower of cost and net realisable value.
Valuation allowance. 26,127 --------- 33,051 --------- 33,051 --------- 389,358 --------- (389,358) --------- 16,541 -------- 16,541 -------- 16,541 -------- 64,210 -------- (64,210) -------- 252 -------- 252 -------- 252 -------- 16,037 -------- (16,037) -------- Net deferred tax asset / (liability) balance.................................... $ -- $ -- $ -- ========= ======== ======== At December 31, 2000, 1999 and 1998, the Company fully reserved its deferred tax assets. The Company believes sufficient uncertainty exists regarding the realizability of the deferred tax assets such that a full valuation allowance is required. The net change in the valuation allowance during the years ended December 31, 2000, 1999 and 1998, was $325.1 million, $48.2 million, and $10.7 million, respectively. As of December 31, 2000, the Company's U.S. federal net operating loss carryforward for income tax purposes was approximately $1.07 billion. If not utilized, the federal net operating loss carryforwards will expire between 2011 and 2020. Changes in ownership, as defined by Section 382 of the Code, may limit the amount of net operating loss carryforwards used in any one year. The Company's federal research tax credit carryforwards for income tax purposes are approximately $8.6 million. If not utilized, the federal tax credit carryforwards will expire between 2011 and 2020. Federal net operating losses of approximately $1.02 billion as of December 31, 2000 are the result of the exercise of certain employee stock options and warrants. When recognized, the tax benefit of these loss carryforwards are accounted for as a credit to additional paid-in capital rather than a reduction of the income tax provision. Note 11: Restructuring Charges The Company recorded a restructuring charge of $2.3 million in the year ended December 31, 2000 for the closures of its Dallas, Texas and Ottawa, Canada facilities. The restructuring charges are broken down as follows:
Valuation allowance. The Company has determined that no deferred tax asset valuation allowance was necessary as of September 30, 2012, and should not be necessary thereafter, as a result of the issuances of the Securities with respect to the Exchange, together with any issuances of Series A Preferred Stock or the conversion of the Series A Preferred Stock into Voting Common Stock in connection with the PIPE Offering, and the currently anticipated loss from the contemplated classified asset disposition as reflected in the draft Company’s Form 10-Q for the quarter ended September 30, 2012 provided to Shareholders. Such valuation allowance determination has been determined in accordance with GAAP applied on a consistent basis during the periods involved. The Company has received a letter from its independent accounting firm confirming that such independent accounting firm has reviewed the Company’s determination that no deferred tax asset valuation allowance was necessary as of September 30, 2012, and should not be necessary thereafter, as a result of the issuance of the Securities in connection with the Exchange, together with any issuance of Series A Preferred Stock or the conversion of the Series A Preferred Stock into Voting Common Stock, and the currently anticipated loss from the contemplated asset disposition, and does not disagree with the Company’s determination and will not require the Company to establish a deferred tax asset valuation allowance unless required to by a regulatory authority.
Valuation allowance. The Company has determined that no deferred tax asset valuation allowance was necessary as of September 30, 2012, and should not be necessary thereafter, as a result of the issuances of the Securities pursuant to this Agreement, together with any issuances of Common Stock and Non-Voting Common Stock in connection with the TARP Exchange, and the currently anticipated loss from the contemplated classified asset disposition as reflected in the draft Company’s Form 10-Q for the quarter ended September 30, 2012 provided to Purchasers. Such valuation allowance determination has been determined in accordance with GAAP applied on a consistent basis during the periods involved. The Company has received a letter from its independent accounting firm confirming that such independent accounting firm has reviewed the Company’s determination that no deferred tax asset valuation allowance was necessary as of September 30, 2012, and should not be necessary thereafter, as a result of the issuance of the Securities pursuant to this Agreement, together with any issuance of Common Stock and Non-Voting Common Stock in connection with the TARP Exchange, and the currently anticipated loss from the contemplated asset disposition, and does not disagree with the Company’s determination and will not require the Company to establish a deferred tax asset valuation allowance unless required by a regulatory authority.