Which of the Following Situations Would Require Interperiod Income Tax

question 40

Multiple Choice

Which of the following situations would require interperiod income tax allocation procedures?

• A) A temporary difference exists because the tax basis of capital equipment is less than its reported amount in the financial statements.
• B) Proceeds from an insurance policy on capital equipment lost in a fire exceed the book value of the equipment.
• C) Last period's ending inventory was understated causing both net income and income tax expense to be understated.
• D) Nontaxable interest payments are received on municipal bonds.

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