When calculating income tax expense under the statement of financial position approach to income allocation,which of the following formulae is used?

Question

Quizplus · Accepted Answer

The statement of financial position approach to income allocation involves calculating income tax expense by adding current income tax expense and deferred income tax expense. This approach recognizes the timing differences between when income and expenses are recognized for accounting purposes and when they are recognized for tax purposes. Choice A subtracts deferred income tax expense from income tax payable, which would only be correct if there were no current income tax expense. Choice C subtracts income tax payable from deferred income tax expense, which is the opposite of what should be done for this calculation. Choice D refers to the differences between accounting and tax rules but does not provide a formula for calculating income tax expense under the statement of financial position approach.

When Calculating Income Tax Expense Under the Statement of Financial