GAAP specifies that when the tax rates change,the

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When tax rates change, it is necessary to adopt the liability approach, which involves adjusting the value of deferred tax liabilities and assets to reflect the new tax rate. This ensures that the financial statements accurately reflect the impact of the tax rate change on the company's future tax obligations. The asset approach would only apply if the tax rate change resulted in an increase in the value of the company's assets, and the income and retained earnings approach are not relevant to this type of accounting adjustment.

GAAP Specifies That When the Tax Rates Change,the