It is important to note that the differences lies on

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It is important to note that the differences lies on the folliwng: requirements imposed by regulatory agencies in a certain industries; the latitude that exist; and the judgments and estimates that must be made in applying in given principle When regulatory requirements differ from GAAP, most organizations prepare two sets of financial statements, one consistent with GAAP and the other consistent with the requirements of the regulatory agency. Under certain conditions, taxpayers may elect to disregard the accrual concept and to be taxed on the difference between cash receipts and cash expenditures. Many personal-services businesses do this. The depletion allowance computed for tax purposes may bear no relation to the depletion principle of financial accounting. Tax accounting depletion may be based on cost or revenues; financial accounting depletion is based exclusively on costs. In taxation a distinction is made between ordinary income and capital gains, with different tax rates being applied to the two categories.
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  • Spring '12
  • I.L
  • Balance Sheet, Net Income, Generally Accepted Accounting Principles, Tax accounting depletion, financial accounting depletion

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Christopher Reinemann
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