Which of the following statements most accurately describes interim period tax expense?
A) The best estimate of the annual tax rate times the ordinary income (loss) for the quarter.
B) The best estimate of the annual tax rate times income (loss) for the year to date less tax expense (benefit) recognized in previous interim periods.
C) Average tax rate for each quarter, including the current quarter, times the current income (loss).
D) The previous year's actual effective tax rate times the current quarter's income.

Question

Quizplus · Accepted Answer

Interim period tax expense is calculated as the best estimate of the annual effective tax rate applied to the year-to-date income, minus any tax expense or benefit recognized in previous interim periods. This approach allows for the adjustment of the tax expense in relation to the actual income and tax rates as they are realized throughout the fiscal year.

Which of the Following Statements Most Accurately Describes Interim Period