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Generally, deductions for additions to reserves for estimated future costs (for example, an allowance for estimated warranty costs) in financial statement reporting are not allowed
Generally, deductions for additions to reserves for estimated future costs (for example, an allowance for estimated warranty costs) in financial statement reporting are not allowed for Federal income tax purposes because allowing the deduction would: Result in a mismatching of revenues and expenses Violate established public policy Correct Answer Violate the economic performance requirement You Answered Violate the accounting principle of conservatism Violate GAAP
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