The Application of SFAS No

question 84

Essay

The application of SFAS No.109 results in the recording on the financial statements of an enterprise of deferred tax assets and liabilities.The initial identification of these deferred tax assets and liabilities raises the issue as to how these amounts should be shown on the balance sheet in terms of current and noncurrent classifications.One approach advocated by some in the profession is to classify all deferred taxes as noncurrent.
Required:
Explain the advantages and disadvantages of this approach and indicate if this approach is acceptable under SFAS No.109.

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Definitions:

Bureaucratic

Pertaining to a system or organization marked by fixed rules, hierarchy, and a detailed division of administrative tasks.

Mainstream Society

The dominant or prevailing cultural and social norms, values, and practices of a society.

Denomination

A recognized autonomous branch within a religion, differing in some aspects of doctrine and practice but sharing a common faith background.

Ecclesia

An organized, often state-supported church that claims a majority of a society's membership and has a formal role in the state apparatus.