Intraperiod Income Tax Allocation--a Practical Concept.

Abstract The Accounting Principles Board of the American Institute of Certified Public Accountants, in its meeting on April 11, 1959, took the position that Accounting Research Bulletins issued by the predecessor Committee on Accounting Procedure should be considered as continuing in force with the same degree of authority as before. Thus, the concept of income tax allocation discussed in Accounting Research Bulletin continues to have official support. The present study shows that the income tax allocation concept, applied on an intraperiod basis, also has support in practice as evidenced by a survey of the financial reporting practices of eighty-two firms covering the years 1961, 1962, and the first six months of 1963. The problem of intraperiod income tax allocation arises when there are both normal, recurring items such as the results, positive or negative, of business operations and extraordinary items such as gains or losses on the sale of plant and equipment occurring in the same year.