Textbook Problem

Interperiod and Intraperiod Tax Allocation

Income tax allocation is an integral part of generally accepted accounting principles. Income tax allocation consists of both intraperiod and inter-period tax allocation.

Required:

1. 1. Explain the difference between interperiod and intraperiod income tax allocation.
2. 2. Explain how a corporation discloses its income tax expense (or credit) for the year under intraperiod allocation.
3. 3. Provide an example of intraperiod tax allocation on a corporation’s income statement that includes income from continuing operations, a loss from the sale of a discontinued component, and a gain from the operations of the discontinued. Assume a 30% tax rate.