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GAAP requirement to recognize all known liabilities

In the M&A module, when illustrating the different effective tax rates in the Pre-/Post-142/338 election scenarios, it is stated that GAAP requires all companies to recognize all known liabilities as soon as possible, hence why under a 338 election, the reported GAAP effective tax rate is lower ... Read More

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by Guest 1.

added 10 years ago

Re: GAAP requirement to recognize all known liabilities

Perhaps the numerical example from the Financial Modeling Module would help: Company ABC has Revenue of $500 and Expenses of $300. Where it differs between GAAP and IRS reporting is depreciation, where GAAP reports $20 and IRS reports $40 (due to MACRS). So Company ABC has EBT of $180 under GAAP an... Read More

by Guest 1.

added 10 years ago

Re: GAAP requirement to recognize all known liabilities

Thank you for clarifying your question. Our initial response (which was based in part on the Advanced M&A module) is in reference to PERMANENT differences in taxes, which will never reverse in the future. An example of this is the deductibility of certain identifiable intangibles for GAAP but no... Read More

by WST Expert 1.

added 10 years ago