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Congress considers impact of accounting on tax reform

from Accounting Today

The House Ways and Means Committee held a hearing on the interaction of tax and financial accounting rules on tax reform. "When companies report profits in their financial statements, the primary purpose is to convey information about a company's financial condition to investors and creditors," said House Ways and Means Committee Chairman Dave Camp, R-Mich., in his opening statement. "Conversely, the primary purpose of tax accounting is to measure income for levying the federal income tax. These two functions are not necessarily consistent, and in some cases, may even be at odds. For publicly traded companies focused on earnings per share in addition to cash flows, changes in tax policy might not produce intended results if the effect of tax policy on EPS is not well understood." more

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