When recognizing deferred tax assets and liabilities, the income statement approach and the balance sheet approach yield identical results:

Question

Quizplus · Accepted Answer

The income statement approach and the balance sheet approach will yield identical results when either the enacted tax rates applicable to future periods do not change or the firm recognizes no valuation allowance on deferred tax assets. The choice of either approach will not affect the recognition of deferred tax assets and liabilities as long as these conditions are met.

When Recognizing Deferred Tax Assets and Liabilities, the Income Statement