Corporation Income Statements

2 Pages

Financial Accounting
Course Code
Liang Chen

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Corporation Income Statements Income statements for corporations are the same as the statements for proprietorships or partnerships except for one thing: the reporting of income tax. Corporate Income Tax For tax purposes, corporations are considered to be a separate legal entity. As a result, income tax expense is reported in a separate section of the corporation income statement, which is located before net income. There are two separate accounts added: income before income tax and income tax expense. Income tax is calculated annually, but estimated and remitted monthly. Usually, the estimated and accrued amount of income tax is different from the actual amount. When the definitive amount is given, an adjusting entry with the income tax expense and income tax payable accounts are adjusted. Interperiod Tax Allocation The difference in accounting objectives for revenues and expenses for GAAP and CCRA purposes causes timing differences to occur. These timing differences result in future income taxes. The act of dividing the amounts due and receivable for current operations and future operations is called interperiod tax allocation. Intraperiod Tax Allocation - Intraperiod tax allocation refers to the procedure of associating income taxes within the income statement to the specific item that di
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