Concept explainers
1.
Intra period tax allocation
Every business firm report their income from continuing operation and discontinued operation separately in financial statement for better understanding about the operation of business. So, for the tax purpose, a business should divide the total income tax expense for a reporting period between continuing and discontinued operations. A gain from discontinued operation increase the taxable income while loss from discontinued reduce the taxable income and produce a tax benefit.
To prepare: Recast the Income statement of R J Corp. to reflect intra-period tax allocation
2.
To Reconcile: Income tax expenses calculated in recast income statement with reported income tax expenses amount
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