Case $12-5$

Asset$$Liability Method

SFAS No$.109,$Accounting for Income Taxes$($FASB ASC $740),$ requires companies to use the asset$$liability method of interperiod income tax allocation.

Required:

Discuss the criteria for recognizing deferred tax assets and deferred tax liabilities under the provisions of FASB ASC $740.$

Compare and contrast the asset$$liability method and the deferred method.