Financial Statement Disclosure of the Components of Income Tax Expense

question 59

Multiple Choice

Financial statement disclosure of the components of income tax expense:

• A) Must be made on the face of the income statement.
• B) Usually is included in the disclosure notes.
• C) Is not necessary when only permanent differences exist.
• D) Must include the amount of cash paid for taxes.

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Definitions:

Consolidated Balance Sheet

A financial statement showing the financial position of a parent company and its subsidiaries as if they were a single entity.

Fair Value

The gain expected to be received from an asset disposal or the amount necessary to cover a liability in a mutual transaction among market counterparts at the estimated date.

Equipment

Equipment consists of the tangible operational assets used by a business to conduct its operations and generate income.

Consolidated Balance Sheet

A financial statement that presents the assets, liabilities, and shareholders' equity of a parent company and its subsidiaries as one single entity.