Answer:
This is true.
Explanation:
ASC 740 requires a valuation allowance to be made when there is a more than 50% probability that the deferred asset may not be utilized
due to non-availability of sufficient future taxable income. Valuation allowance, which is a contra-account to the deferred tax asset account, is just like a provision for doubtful debts and offsets a portion of the deferred tax asset.