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For corporations, income tax expense on the financial statements is calculated: Group of answer choices Earnings...

For corporations, income tax expense on the financial statements is calculated:

Group of answer choices

Earnings before taxes x 21%

The corporation's tax liability +- changes in deferred taxes

Earnings before taxes x the corporation's tax rate

The corporation's taxable income - tax deductions.

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Answer #1

OPTION C----The corporation's tax liability +- changes in deferred taxes

Income tax expense is calculated as The corporation's tax liability +- changes in deferred taxes.......

Taxable income is different than accounting income , hence items creating temporary difference are recognized for creating deferred taxes. Deferred taxes can be simply be related to as taxes to be paid later. Total tax liability is calculated on basis of taxable income, and additional or subtractions are done for deferred taxes in arriving at income tax expense to be reported in income statements.

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