Taxable income of a corporation:
differs from accounting income because companies use the full accrual method for financial reporting but use the modified cash basis for tax reporting.
is based on generally accepted accounting principles.
is reported on the corporation's income statement.
differs from accounting income due to differences in intraperiod allocation between the two methods of income determination.

Garrett is an executive vice president at samm hardware. he researches a proposal by a larger company, maximum hardware, to combine the two companies. by analyzing past performance, conducting focus groups, and interviewing maximum employees, garrett concludes that maximum has poor profit margins, sells shoddy merchandise, and treats customers poorly. what actions should garrett and samm hardware take? a. turn down the acquisition offer and prepare to resist a hostile takeover. b. attempt a friendly merger and use managerial hubris to improve results at maximum. c. welcome the acquisition and use knowledge transfer to impart sam hardware's management practices. d. do nothing; the two companies cannot combine without samm hardware's explicit consent.