Rodriguez, Inc. has an estimated annual tax rate of 40% in the first quarter of 2021. Pretax income for the first quarter was $350,000. At the end of the second quarter of 2021, Rodriguez expects the annual tax rate to be 36% because of anticipated tax credits. Pretax income for the second quarter was $390,000. Assume no items in either quarter requiring the net-of-tax presentation.

a. How much income tax expense is recognized in the first quarter of 2021?

b. How much income tax expense is recognized in the second quarter of 2021?

c. Briefly explain how a company measures income tax expense to be reported in an interim period?