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?
Under bothIFRS 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.