The balance sheet approach compares the carrying value with the tax base of the assets and liabilities.

Name: The balance sheet approach compares the carrying value with the tax base of the assets and liabilities.
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The balance sheet approach does indeed compare the carrying value (book value) with the tax base (tax value) of assets and liabilities to determine the amount of deferred tax liability or asset that should be recognized on a company's balance sheet.

The Balance Sheet Approach Compares the Carrying Value with the Tax