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One of the longest debates in accounting history is the issue of deferred taxes. The controversy...

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Accounting

One of the longest debates in accounting history is the issue ofdeferred taxes. The controversy began in the 1940s and hascontinued, even after the FASB issued Statement of FinancialAccounting Standards No.109 [FASB ASC 740: Income Taxes] in1992. At issue is the appropriate treatment of tax consequences ofeconomic events that occur in years other than that of the eventsthemselves.

Required:

1. Distinguish between temporary differences and permanentdifferences. Provide an example of each.

2. Distinguish between intraperiod tax allocation andinterperiod tax allocation (deferred tax accounting) Provide anexample of each.

3. How are deferred tax assets and deferred tax liabilitiesclassified and reported in the financial statements?

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