Articles On This Page
Proposed Accounting Standards Update (ASU): Income Taxes (Topic 740)-Improvements to Income Tax Disclosures
Income Taxes (Topic 740): Improvements to Income Tax Disclosures
FASB Accounting Standards Updates - Accounting Standards Update No. 2023-09 -- Income Taxes (Topic 740) --- Improvements to Income Tax Disclosures
Accounting Standards Update No. 2023-09 -- Income Taxes (Topic 740) --- Improvements to Income Tax Disclosures
Proposed Accounting Standards Update ASU: Income Taxes (Topic 740)-Improvements to Income Tax Disclosures
Income Taxes –FASB Proposes Enhancements to Income Tax Disclosures
Articles
Proposed Accounting Standards Update (ASU): Income Taxes (Topic 740)-Improvements to Income Tax Disclosures
Summary - The FASB has released for public comment the proposed Accounting Standards Update (ASU), Income Taxes (Topic 740) – Improvements to Income Tax Disclosures. The proposed ASU addresses requests for improved income tax disclosures from investors, lenders, creditors, and other allocators of capital (collectively, "investors") that use the financial statements to make capital allocation decisions. The comment deadline is May 30, 2023.
Improving Understandability of the Tax Provision:
During the FASB’s 2021 agenda consultation process and other stakeholder outreach, investors expressed concerns that existing income tax disclosures do not provide sufficient information to understand the tax provision for an entity that operates in multiple jurisdictions. Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid in the statement of cash flows, to evaluate income tax risks and opportunities. While investors told FASB that they generally find these disclosures helpful, they suggested possible enhancements to better (a) understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (b) assess income tax information that affects cash flow forecasts and capital allocation decisions, and (c) identify potential opportunities to increase future cash flows.
The proposed amendments would address investor requests for more transparency about income tax information, including jurisdictional information, by requiring:
- Consistent categories and greater disaggregation of information in the rate reconciliation; and
- Income taxes paid disaggregated by jurisdiction.
Effective Dates:
The FASB will determine the effective date and whether early adoption of the amendments is permitted after it considers stakeholder feedback on the proposed amendments. The proposed amendments would be applied retrospectively.
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Income Taxes (Topic 740): Improvements to Income Tax Disclosures
Summary - The ASU is effective for public business entities for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025.
Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.
The amendments should be applied on a prospective basis. Retrospective application is permitted.
Among other things, these amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income [or loss] by the applicable statutory income tax rate).
The amendments require that all entities disclose on an annual basis the following information about income taxes paid:
- The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes
- The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received).
The amendments also require that all entities disclose the following information:
- Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign
- Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
FASB Accounting Standards Updates - Accounting Standards Update No. 2023-09 -- Income Taxes (Topic 740) --- Improvements to Income Tax Disclosures
Summary - We have published a new edition of the Summary Checklist of Recent Authoritative U.S. Accounting Standards. This new edition reflects the issuance of Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU is effective for public business entities for annual periods beginning after December 15, 2024. For other entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Accounting Standards Update No. 2023-09 -- Income Taxes (Topic 740) --- Improvements to Income Tax Disclosures
Summary - We have published a new edition of the Summary Checklist of Recent Authoritative U.S. Accounting Standards. This new edition reflects the issuance of Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU is effective for public business entities for annual periods beginning after December 15, 2024. For other entities, the amendments are effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.
For more information, click here.
© 2024 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Proposed Accounting Standards Update ASU: Income Taxes (Topic 740)-Improvements to Income Tax Disclosures
Summary - The FASB has released for public comment the proposed Accounting Standards Update (ASU), Income Taxes (Topic 740) – Improvements to Income Tax Disclosures. The proposed ASU addresses requests for improved income tax disclosures from investors, lenders, creditors, and other allocators of capital (collectively, “investors”) that use the financial statements to make capital allocation decisions. The comment deadline is May 30, 2023.
Improving Understandability of the Tax Provision
During the FASB’s 2021 agenda consultation process and other stakeholder outreach, investors expressed concerns that existing income tax disclosures do not provide sufficient information to understand the tax provision for an entity that operates in multiple jurisdictions. Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid in the statement of cash flows, to evaluate income tax risks and opportunities. While investors told FASB that they generally find these disclosures helpful, they suggested possible enhancements to better (a) understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (b) assess income tax information that affects cash flow forecasts and capital allocation decisions, and (c) identify potential opportunities to increase future cash flows.
The proposed amendments would address investor requests for more transparency about income tax information, including jurisdictional information, by requiring:
Consistent categories and greater disaggregation of information in the rate reconciliation; and
Income taxes paid disaggregated by jurisdiction.
Effective Dates
The FASB will determine the effective date and whether early adoption of the amendments is permitted after it considers stakeholder feedback on the proposed amendments. The proposed amendments would be applied retrospectively.
For more information, click here.
© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Income Taxes –FASB Proposes Enhancements to Income Tax Disclosures
Summary - The FASB has released for public comment the proposed Accounting Standards Update (ASU), Income Taxes (Topic 740) – Improvements to Income Tax Disclosures. The proposed ASU addresses requests for improved income tax disclosures from investors, lenders, creditors, and other allocators of capital (collectively, “investors”) that use the financial statements to make capital allocation decisions. The comment deadline is May 30, 2023.
Improving Understandability of the Tax Provision
During the FASB’s 2021 agenda consultation process and other stakeholder outreach, investors expressed concerns that existing income tax disclosures do not provide sufficient information to understand the tax provision for an entity that operates in multiple jurisdictions. Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid in the statement of cash flows, to evaluate income tax risks and opportunities. While investors told FASB that they generally find these disclosures helpful, they suggested possible enhancements to better (a) understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (b) assess income tax information that affects cash flow forecasts and capital allocation decisions, and (c) identify potential opportunities to increase future cash flows.
The proposed amendments would address investor requests for more transparency about income tax information, including jurisdictional information, by requiring:
- Consistent categories and greater disaggregation of information in the rate reconciliation; and
- Income taxes paid disaggregated by jurisdiction.
Effective Dates
The FASB will determine the effective date and whether early adoption of the amendments is permitted after it considers stakeholder feedback on the proposed amendments. The proposed amendments would be applied retrospectively.
For more information, click here.
© 2023 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.