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CASE DISCUSSIONS Case Discussions Elena Zak Franklin University ACCT 715 Financial Accounting Theory Professor Davidson October 27, 2019
CASE DISCUSSIONS CASE 12-3 Intraperoid Versus Interperoid Income Tax Allocation Need for Intraperiod Income Tax Allocation An intraperiod tax allocation is the allocation of income taxes to different parts of the results appearing in the income statement of a business so that some line items are stated net of tax (Bragg, 2019). According to FASB ASC 740-20-45 Income Taxes – Intraperiod Tax Allocation – Other Presentation Matters, income tax expense or benefit for the year shall be allocated among continuing operations, discontinued operations, other comprehensive income, and items charged or credited directly to shareholders' equity (FASB ASC 740-20-45, 2009). The intraperiod tax allocation concept is used to reveal the "true" results of certain transactions net of all effects, rather than disaggregating them from income taxes. The reason for using intraperiod tax allocations is to improve the quality of information presented to the readers of a company’s financial statements, such as the relationship between income tax expense and the individual income from continuing operations, discontinued operation, and extraordinary items (Bragg, 2019). Income Tax is an Expense Rather Than Distribution An interperiod tax allocation is a temporary difference between the effects of tax policy on the financial reporting of a business and its normal financial reporting as mandated by an accounting framework. There are four types of transactions that can cause a temporary difference, such as delayed recognition of taxable income, accelerated the recognition of taxable income, delayed recognition of expenses for tax purposes, and accelerated recognition of expenses for tax purposes. Accountants who favor interperiod
CASE DISCUSSIONS

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