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? IFRS only U.S. GAAP only 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.

Question Of The Week - Financial Reporting And Analysis (2) - CFA Level 1

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  08 Sep 2018 at 8:08 pm
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  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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