Financial Accounting and Reporting-CPA Exam 2025 – 400 Free Practice Questions to Pass the Exam

The calculation of current income tax expense or benefit centers on the amount that is actually refundable or payable based on the taxable income for the current accounting period. This reflects the tax liability that a company expects to settle in cash, either through a payment to the tax authorities or through a refund from them, depending on the company's tax position.

To further clarify, the current tax expense is derived from the income the company has earned that is subject to tax in that particular year, adjusted for any deductions or credits that may apply. This ensures that the recorded expense accurately represents the taxes that the company is required to pay or expects to receive back.

In contrast, other options do not capture the essence of current tax expense. For example, total revenue does not equate to taxable income since it does not account for various deductions and adjustments that impact tax calculations. Similarly, while deferred tax adjustments may relate to past activities, they do not directly reflect the current year's tax actions or outcomes. The idea of multiplying total assets by the tax rate also does not relate to income tax calculations, as assets are not directly tied to taxable income in this manner. Thus, the correct understanding aligns closely with the amount that is explicitly payable or refundable on the current tax return.