Which one of the following would require interperiod tax allocation?

Question

Quizplus · Accepted Answer

Choice D involves the equity method of accounting, where the investing company recognizes a portion of the investee’s income in its own financial statements. However, for tax purposes, the investing company will only recognize the investment income when it is received. This difference in timing requires interperiod tax allocation to properly match the income recognized in the financial statements with the income recognized for tax purposes. Choices A, B, and C do not require interperiod tax allocation.

Which One of the Following Would Require Interperiod Tax Allocation