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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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What four principles did the FASB conclude were necessary to implement the objectives of the comprehensive asset and liability approach?

To determine

State the important four principles concluded by FASB that are essential to implement the objective of the comprehensive asset and liability approach.

Explanation

Temporary Difference: Temporary difference refers to the difference of one income recognized by the tax rules and accounting rules of a company in different periods. Consequently the difference between the amount of assets and liabilities reported in the financial reports and the amount of assets and liabilities as per the company’s tax records is known as temporary difference.

For following the objective of the comprehensive asset and liability approach, four principles concluded by FASB in which the corporation must ensure:

    1. The recognition of tax liability/assets for the estimated income tax payable/refund on the income tax return for the current year...

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