Which of the following is not part of the balance sheet approach when computing income tax expense?
A) Identifying at each balance sheet date all differences between the book basis of assets, liabilities, and tax loss carryforwards
B) Eliminating permanent differences between book and tax basis.
C) Eliminating deferred tax assets.
D) Assessing the likelihood that the firm will realize the benefits of deferred tax assets in the future.

Question

Quizplus · Accepted Answer

Eliminating deferred tax assets is not part of the balance sheet approach when computing income tax expense. The balance sheet approach involves identifying differences between book and tax basis and eliminating permanent differences. The approach also includes assessing the likelihood that the firm will realize the benefits of deferred tax assets in the future. However, the elimination of deferred tax assets is not a part of this approach.

Which of the Following Is Not Part of the Balance