In accordance with the guidance in ASC 740-10 and ASC 805-740, an acquirer recognizes DTAs and DTLs associated with the assets acquired and the liabilities assumed in a business combination. The acquirer also assesses whether a valuation allowance is required against some or all of the acquired DTAs when it is not more likely than not that such DTAs will be realized. This is generally done as part of purchase accounting. The business combination may also cause a change in judgment about the realizability of the acquirer’s DTAs.
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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.