FASB To Simplify Presentation of Deferred Income Taxes In Financial Statements

Saturday, January 31, 2015 12:23 PM | NCSA Website Manager (Administrator)
FASB said it would simplify current rules by requiring that deferred income tax liabilities and assets be presented as noncurrent in a classified statement of financial position.

Under current guidance, entities are required to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position.

FASB's stakeholders said the current accounting requirements result in little or no benefit to users of financial statements because the classification doesn't generally align with the time period in which the recognized deferred tax amounts are expected to be recovered or settled, the proposal says.  In addition, there are costs for an entity to separate deferred income tax liabilities and assets into a current and noncurrent amount.
 
Public companies would be required to adopt the rules for annual periods, including interim periods within those annual periods, beginning after Dec. 15, 2016. Early adoption wouldn't be permitted.  For all other entities, the rules would be effective for annual periods beginning after Dec. 15, 2017, and interim periods in annual periods beginning after Dec. 15, 2018. Earlier adoption would be permitted, but not before the effective date for public entities.
 
FASB's proposal with respect to the Balance Sheet classification of deferred taxes is available here. 


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