If the US transitioned from separate accounting rules for book and tax purposes to one set of rules for both, which set of rules might be selected and why? How might the pending transition from US GAAP to IFRS impact your decision, if at all?© BrainMass Inc. brainmass.com June 3, 2020, 2:07 am ad1c9bdddf
If the US transitioned from separate accounting rules for book and tax purposes to one set of rules for both, which set of rules might be selected and why?
Trying to mesh the two separate systems of accounting presents a real problem, but if I had to choose, I would prefer book methods to tax. The reason is that the book method attempts to portray the true balance sheet, net earnings and cash flow.
Of course, we realize that financial statements include estimates that aren't always perfect or accurate, but the accounting constraints tend to provide stakeholders with a conservative, objective and consistent view that can be relied upon, year over year:
? Objectivity principle: the company financial statements ...
The 467 word solution explains the reasons for the preference of systems for domestic as well as international companies.