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Question of the Week - Financial Reporting and Analysis

AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
edited February 2016 in Level 1 Questions

A bookstore earned $200,000 over the past year. At a tax rate of 40%, that bookstore incurs an income tax expense of $80,000. Under which of the following accounting systems would the expense typically be categorized as an operating activity?

Question of the Week - Financial Reporting and Analysis 25 votes

IFRS only
16%
paulopitaedaindilMindaugasBlueJay3535 4 votes
U.S. GAAP only
20%
osaloisduyhg99sinivyOLUSEGUNsuls 5 votes
IFRS and U.S. GAAP
64%
SarahAdaptPrepgoogs1484jasdevBeregondmdlynch3jtk08001pabulumsmrl38SwatihakziAlegriasanskriti14arow1967sandeepavannoord 16 votes

Comments

  • AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
    IFRS and U.S. GAAP

    Under both IFRS and U.S. GAAP, income tax expense on operating income is an operating expense. The difference between the two is when the income comes from a financing or an investing activity. In that case, the expense would still be an operating expense under U.S. GAAP but not under IFRS.

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