Tucows 2015 Annual Report Download - page 81

As we account for income taxes under the asset and liability method, we recognize deferred tax assets or liabilities
for the anticipated future tax effects of temporary differences between the financial statement basis and the tax basis of our
assets and liabilities. We record a valuation allowance to reduce the net deferred tax assets when it is more likely than not
that the benefit from the deferred tax assets will not be realized. In assessing the need for a valuation allowance, historical
and future levels of income, expectations and risks associated with estimates of future taxable income and ongoing tax
planning strategies are considered. In the event that it is determined that the deferred tax assets to be realized in the future
would be in excess of the net recorded amount, an adjustment to the deferred tax asset valuation allowance would be
recorded. This adjustment would increase income in the period that such determination was made. Likewise, should it be
determined that all or part of a recorded net deferred tax asset would not be realized in the future, an adjustment to increase
the deferred tax asset valuation allowance would be charged to income in the period that such determination would be
made.
On a periodic basis, we evaluate the probability that our deferred tax asset balance will be recovered to assess its
realizability. To the extent we believe it is more likely than not that some portion of our deferred tax assets will not be
realized, we will increase the valuation allowance against the deferred tax assets. Realization of our deferred tax assets is
dependent primarily upon future taxable income. Our judgments regarding future profitability may change due to future
market conditions, changes in U.S. or international tax laws and other factors. These changes, if any, may require possible
material adjustments to these deferred tax assets, impacting net income or net loss in the period when such determinations
are made.
Recently Issued Accounting Standards
See “Note 2 – Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial
Statements included in Part II, Item 8 of this Annual Report for information regarding recently issued accounting
standards.
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