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Can somebody explain why this nondeductible expense is being included in determining income? I don’t get it…
In financial statements prepared on an income-tax basis, how should the nondeductible portion of expenses, such as meals and entertainment, be reported?
Correct A.
Included in the expense category in the determination of income
B.
Included in a separate category in the determination of income
C.
Excluded from the determination of income, but included in the determination of retained earnings
D.
Excluded from the financial statements
“Taxable income is an amount resulting from the application of tax rules governing revenues and expenses. Some revenues/expenses are specifically excluded or subjected to limitation(s).
When determining net income using the income-tax basis, a fair determination necessitates using the nondeductible (for taxes) portion of expenses (such as meals and entertainment) as long as they are legitimate business expenses.”
AUD - 93
BEC - 83
FAR - 83
REG - 84Nobody calls me chickenAUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 1699% Ninja MCQ only
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