Interim reporting is required of many companies so that users of financial statements can be kept relatively current on what a company has been doing since their last audited financial statements were released. However, there are some difficult accounting issues that a company faces when reporting on an interim basis. REQUIRED: (a) (b) (c) What are the major accounting problems related to interim reports? What problem exists with income taxes in interim reports and how do generally accepted accounting principles (GAAP) recommend that taxes be reported? What does GAAP require? Many analysts and academicians have attempted to predict the year's net income after the first quarter's income is reported. These attempts are generally unsuccessful, no matter how sophisticated the prediction model. What might be the reason for this inability to predict?