Chapter 16, Problem 16.12E

1.

To determine

Valuation Allowance

Valuation allowance is that financial item that offsets the deferred tax assets either fully or partly as deferred tax assets are more likely not realizable.

Deferred tax asset

When the Income Tax Expense account i.e. the estimated income tax amount is more than the outstanding amount of income tax i.e. the Income Tax Payable account, the difference is to be debited to Deferred Tax Asset account

To identify: Specific citation that describes the guidelines for determining the disclosure Requirements

2.

To determine

To explain:  Guidelines for valuation allowance in case of FASB.