E.14 Interim Reporting
Under U.S. GAAP, an entity must estimate its ordinary income and the
related tax expense or benefit for the full fiscal year (total of expected current
and deferred provisions) to calculate its estimated AETR. Ordinary income or loss is
income from continuing operations, excluding SUI items. There are other limited
exceptions in which the AETR is not used to compute the income tax provision for the
interim period. Amounts and related tax effects, if any, excluded from the overall
forecasted AETR are generally accounted for either discretely or through a separate
forecasted tax rate. See Chapter
7 for additional guidance.
Under IFRS Accounting Standards, entities would determine, if
practical, a separate estimated average annual effective income tax rate for each
taxing jurisdiction and apply it individually to the interim-period pretax income of
each jurisdiction. The interim-period tax charge is the sum of each entity’s interim
tax charge. IAS 12 does not address interim tax reporting. Paragraphs B12 through
B22 of IAS 34 provide examples of the application of the recognition and measurement
principles of IAS 34 to interim income tax expense.