Final answer:
The notion that GAAP and IFRS only require enacted tax rates to be used in calculating the effective tax rate is false. They require the use of enacted or substantively enacted tax rates when preparing financial statements.
Step-by-step explanation:
The statement that U.S. GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards) require the estimated effective tax rate to be enacted tax rates only is false. Both GAAP and IFRS require companies to use the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period when estimating the annual effective tax rate. The effective tax rate is the average rate at which a corporation is taxed and reflects the actual tax paid as a percentage of net income before taxes. It includes both current and deferred tax expenses or benefits that are recognized in the fiscal year.