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Basic Question 1 of 6

The taxable income of a corporation ______

I. differs from accounting income due to differences in interperiod allocation and permanent differences between the two methods of income determination.
II. is based on generally accepted accounting principles.
III. is reported on the corporation's income statement.
IV. differs from accounting income due to differences in intraperiod allocation between the two methods of income determination.

User Contributed Comments 4

User Comment
kalps Taxable income differes bewteen inland revenue and financial statements becos: 1) Differences in interperiod allocation 2) Permanenet difference (arise from different objectives of the IRS and the company)
mtcfa Is interperiod allocation another way of saying temporary differences? I did not see this term used in the text.
thud I think it's the "timing difference" used in the text.
thekapila INTRA PERIOD: Distribution of tax for the current year in different parts of the financial statements. For example, tax expense is shown on income before tax, cumulative effect of a change in principal net of tax, extraordinary items net of tax, prior period adjustments net of tax.

Interperiod: Timing difference between years in which a transaction affects taxable income and accounting (book) income. Temporary differences originate in one period and subsequently reverse in another.
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Edward Liu

Edward Liu

Learning Outcome Statements

describe the differences between accounting profit and taxable income and define key terms, including deferred tax assets, deferred tax liabilities, valuation allowance, taxes payable, and income tax expense;

CFA® 2024 Level I Curriculum, Volume 3, Module 24.