The income tax expense applicable to the second quarter\'s income statement is d

Question

The income tax expense applicable to the second quarter's income statement is determined by:

Multiple Choice

a) subtracting the income tax expense applicable to the first quarter from the income tax expense applicable to the first two quarters.

b) multiplying the effective income tax rate times the income before tax for the second quarter.

c) subtracting the income tax liability applicable to the first quarter from the income tax liability applicable to the first two quarters.

d) dividing the estimated annual income tax expense by four and allocating the amount to the second quarter.

Explanation / Answer

Option B is correct.

The income tax expense applicable to the second quarter's income statement is determined by the tax rate,estimated at the end of the second quarter, which is expected to be applied for the full year effectively. The best most current estimate of the effecive tax rate for the year,should be used to determine the provision of income taxes.

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