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1 December, 01:45

The effect of a change in tax rates:

a. Results in a prior period adjustment.

b. Is allocated between discontinued operations and continuing operations.

c. Is reported separately after discontinued operations.

d. Is reflected in income from continuing operations.

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Answers (1)
  1. 1 December, 01:56
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    d. Is reflected in income from continuing operations.

    Explanation:

    Taxes are defined as the amount that is levied by a government on its citizens, the funds are used to fund government expenditure.

    When a business's tax rate increases the extra cost that results will be recognised as an expense in the income from operations.

    On the other hand when tax rate is reduced it will result in increased income for the business.

    Tax is one of the factors businesses consider when setting up operations. Locations with low tax rates are more favoured as they result in higher income.
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