Which of the following statements is true concerning interim financial reporting?
A)An extraordinary item is defined as being material based on the relationship of the item to the interim period results.
B)The results of a disposal of a business segment may be considered material for the interim period but not for the annual period.
C)No income tax effect will be recognized in an interim period that incurs a loss.
D)The income tax rate to be used for an interim period is based on an estimated income tax rate on annual income.

Question

Quizplus · Accepted Answer

The income tax rate to be used for an interim period is based on an estimated income tax rate on annual income. Choices A and B are incorrect because an extraordinary item is defined by its nature, not its materiality to the interim period, and the results of a disposal of a business segment are considered material for both interim and annual periods. Choice C is incorrect because income tax effects should be recognized in an interim period, even if the period incurs a loss.

Which of the Following Statements Is True Concerning Interim Financial