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3Q

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Intermediate Accounting (Kieso)
Found in: Page 1445

Short Answer

The FASB requires a reconciliation between the effective tax rate and the federal government’s statutory rate. Of what benefit is such a disclosure requirement?

The FASB improves customers' awareness of diverse perspectives by making disclosures.

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Step by Step Solution

Meaning of FASB

The Financial Accounting Standards Board or FASB is an organization created within the private sector to establish and improve financial accounting standards. The experts that set accounting rules and standards are actually regulated by the SEC, but this has generally alone allowed the FASB to create its own claims guidelines.

Explaining the benefit of disclosure requirements

The advantage of reconciling the compelling tax rate and the federal statutory rate is that a speculator can decide the actual fee paid by the undertaking. Such assurance is particularly necessary if there are significant variations in the effective charge rate due to unusual or rare exchanges of the undertaking.

In some cases, companies, as paid because of a favorable term, assess treatment that is not affordable. Such information should be surprisingly valuable to the monetary statement reader.

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