Question

Which of the following items are disclosures for income tax expense in the notes to the financial statements? (Select all that apply.)

a) List of permanent differences.

b) A copy of the tax return.

c) Deferred portion of income tax expense.

d) Current portion of income tax expense.

Answer 1

The correct disclosures for income tax expense in the financial statements are the list of permanent differences, the deferred portion, and the current portion of income tax expense. A tax return copy is not disclosed in the financial statements.

Step-by-step explanation:

The disclosures for income tax expense in the notes to the financial statements include:

• List of permanent differences
• Deferred portion of income tax expense
• Current portion of income tax expense

A copy of the tax return is not typically included in the financial statement disclosures. The notes to the financial statements provide detailed information on the components of income tax expense, including the current portion of income tax, which pertains to taxes due in the current period, and the deferred portion which accounts for future tax liabilities or assets stemming from temporary differences. Additionally, companies disclose the nature of permanent differences, which are items that only appear on the financial statements or tax returns but never both, impacting the effective tax rate.