A friend in a business policy class says, “I always thought the income taxes reported on a corporation’s income statement were the same as the income taxes paid during that period. Now I am not so sure because some other students mentioned interperiod income tax allocation. Furthermore, I have heard about comprehensive and partial allocation. I am confused. Please explain this to me.”
Required
Prepare a written response for your friend. In your discussion be sure to discuss permanent and temporary differences, and to compare comprehensive allocation with partial allocation. Include the reasons for interperiod allocation and comprehensive allocation.