Andrea Meyers, a supervisor in the controller's department at Vanderbilt Company, is reviewing the calculation of the income tax provision to be included in the financial statements for the first quarter of 20X5. She is questioning the estimate of the effective tax rate expected to be applicable for fiscal year 20X5 because it is significantly lower than Vanderbilt's actual effective tax rate for 20X4.
Bob Graber, who prepared the income tax calculation, explains to Andrea that the estimate of the effective annual tax rate reflects the anticipated enactment of a new business energy tax credit that will provide substantial tax benefits to Vanderbilt. This credit has the approval of the president, has been passed by the House of Representatives, and is under consideration in the Senate. It is expected to be enacted no later than the third quarter of 20X5, and its benefits should be available beginning with 20X5 tax returns.

Required
Obtain the most current accounting standards for interim reporting. Andrea has asked you, an accountant in the controller's department, to research the computation of the estimated effective annual tax rate for interim reporting. Write a memo to her reporting your research results. Support your recommendations with citations and quotations from the authoritative financial reporting standards.