The computation of interim income tax is a complex issue as the actual tax liability is computed for the entire year. In addition, the existence of deferred taxes due to differences in GAAP accounting and tax accounting has to be recognized, interim tax provision is a significant estimate for the purpose of interim reporting and it is required to be carried out. The recommendations for computation of effective annual tax rate for interim period supported by appropriate financial reporting standards.

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Chapter 13, Problem 13.8C

To determine

Introduction: The computation of interim income tax is a complex issue as the actual tax liability is computed for the entire year. In addition, the existence of deferred taxes due to differences in GAAP accounting and tax accounting has to be recognized, interim tax provision is a significant estimate for the purpose of interim reporting and it is required to be carried out.

The recommendations for computation of effective annual tax rate for interim period supported by appropriate financial reporting standards.

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