Describe the controversy surrounding the issuance of APB Opinion No. 2, which addressed the investment tax credit? How did the APB resolve this controversy and what was the resulting effect on the board’s authority?
What will be an ideal response?
ANSWER:
The accounting profession was divided on how to account for the investment tax credit. Two alternatives existed: (1) recognize the tax benefit in the year received (the flow-through method), or (2) recognize the tax benefit over the life of the related asset (the deferral method). The APB did not commission a research study on the subject and issued Opinion No. 2, which opted for the deferral method. Three large CPA firms made it known that they would not require their clients to follow the opinion and the SEC continued to allow its registrants to use either method. As a result of this challenge to its authority, the APB issued Opinion No. 4, which permitted the use of either method. This successful challenge caused the binding authority of APB opinions to be questioned in the press for several years.
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Describe Mexico's Federal Consumer Protection Act of 1975
What will be an ideal response?