47
Reporting
Period
Year-to-
Date
Year-to-
Date
Less
Previously
Provided
Reporting
Period
First quarter 20,000$ 8,000$ 8,000$
Second quarter 20,000 (50,000)$ 8,000 16,000 (16,000)$ -$ (16,000)$
Third quarter 20,000 8,000 24,000 (24,000) (16,000) (8,000)
Fourth quarter 40,000 16,000 40,000 (25,000) (24,000) (1,000)
Fiscal year
100,000$ (50,000)$ 40,000$ (25,000)$
First quarter 40,000$ 16,000$ 16,000$
Second quarter 40,000 (50,000)$ 16,000 32,000 (25,000)$ -$ (25,000)$
Third quarter (20,000) (8,000) 24,000 (24,000) (25,000) 1,000
Fourth quarter 40,000 16,000 40,000 (25,000) (24,000) (1,000)
Fiscal year
100,000$ (50,000)$ 40,000$ (25,000)$
Income in all quarters:
Income and loss quarters:
Tax (or Benefit) Applicable to
Assumptions and Reporting
Period
Ordinary
Income
(Loss)
Unusual,
Unusual or
Infrequently
Occurring, or
Extraordinary
Loss
Ordinary Income (Loss)
Unusual,
Unusual or Infrequently
Occurring, or Extraordinary
Loss
> > Example 5: Accounting for Income Taxes Applicable to Ordinary
Income if an Entity Is Subject to Tax in Multiple Jurisdictions
740-270-55-38 Cases A, B, and C assume that an entity operates through
separate corporate entities in two countries. Applicable tax rates are 50 percent
in the United States and 20 percent in Country A. The entity has no unusual or
extraordinary infrequently occurring items during the fiscal year and anticipates
no tax credits or events that do not have tax consequences. (The effect of foreign
tax credits and the necessity of providing tax on undistributed earnings are
ignored because of the wide range of tax planning alternatives available.) For the
full fiscal year the entity anticipates ordinary income of $60,000 in the United
States and $40,000 in Country A. The entity is able to make a reliable estimate of
its Country A ordinary income and tax for the fiscal year in dollars. Computation
of the overall estimated annual effective tax rate in Cases B and C is based on
additional assumptions stated in those Cases.