Methods of Interperiod Tax Allocation
Response to the following problem:
Three methods of interperiod income tax allocation have been advocated. These include (1) the asset/liability method, (2) the deferred method, and (3) the net-of-tax method.
Required
Define interperiod income tax allocation and briefly explain the three methods that have been advocated. Conclude by summarizing the generally accepted accounting principles for interperiod income tax allocation.