Income tax expense in interim reporting should:
A)be based on the quarterly income only.
B)contain a judgment estimation of the annual effective tax rate.
C)be based on the income year-to-date.
D)exclude extraordinary items in earlier quarters of the year.
E)disregard year-end adjustments.

Question

Quizplus · Accepted Answer

Income tax expense in interim reporting should contain a judgment estimation of the annual effective tax rate, as it provides a more accurate picture of the expected tax expense for the entire year. Simply using quarterly income or year-to-date income may not reflect the overall tax expense accurately, and disregarding year-end adjustments or excluding extraordinary items in earlier quarters would not provide a complete picture of the tax expense for the year.

Income Tax Expense in Interim Reporting Should