zimt ag presents its financial statements in accordance with us gaap in 2007 zimt di 1557290

Zimt AG presents its financial statements in accordance with US GAAP. In 2007, Zimt discloses a valuation allowance of $1,101 against total deferred tax assets of $19,201. In 2006, Zimt disclosed a valuation allowance of $1,325 against total deferred tax assets of $17,325. Th e change in the valuation allowance most likely indicates  that Zimt’s:

A. deferred tax liabilities were reduced in 2007.

B. expectations of future earning power has increased.

C. expectations of future earning power has decreased.