Question

What is a company's book equivalent of taxable income and how does this computation enter into the income tax provision process?

Answer 1

The book equivalent of taxable income is the income reported on a company's financial statements that is used for calculating income tax payable. It is computed by making adjustments to the financial statement income for tax purposes. This computed taxable income then enters into the income tax provision process.

Step-by-step explanation:

Book equivalent of taxable income is the income reported on a company's financial statements that is used for calculating income tax payable.

It is calculated by taking the financial statement income and making adjustments for tax purposes, such as disallowed expenses and tax credits.

This computed taxable income then enters into the income tax provision process, where the company determines the income tax expense to be recorded on its financial statements.