What is Income tax rate reconciliation?
In short
Public business entities reconcile income tax at the statutory rate to reported income tax expense, in both percentages and amounts, using specified categories such as state taxes, foreign rate differences and tax credits.
Key takeaways
- Items equal to 5% or more of tax at the statutory rate are shown separately.
- Income taxes paid are also broken down by federal, state and foreign jurisdictions.
- The expanded disclosures apply to public business entities for annual periods beginning after December 15, 2024.
Where it's tested
FAR: Income Taxes (Deferred Tax Accounting) — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A company's statutory tax rate is 21%, but its effective tax rate is 18%. Which item would explain this difference?