Question

When preparing interim FS, income tax expense estimated each quarter using_______

Answer 1

Income tax expense in interim financial statements is estimated each quarter using the estimated effective tax rate.

Step-by-step explanation:

When preparing interim financial statements, income tax expense is estimated each quarter using the estimated effective tax rate.

The estimated effective tax rate is calculated by dividing the estimated annual tax expense by the estimated annual taxable income. This rate is then applied to the taxable income for each quarter to determine the income tax expense.

For example, if the estimated effective tax rate is 25% and the taxable income for the quarter is $100,000, the income tax expense for that quarter would be $25,000.