Disclosure Framework—Disclosure Review: Income Taxes
Last updated on June 15, 2016. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Updated sections are indicated with an asterisk *)
The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.
Project Objective and OverviewThe objective and primary focus of the Disclosure Framework project is to improve the effectiveness of disclosures in the notes to financial statements by clearly communicating the information that is most important to users of each entity’s financial statements. Achieving the objective of improving effectiveness requires development of a framework that promotes consistent decisions about disclosure requirements by the Board and the appropriate exercise of discretion by reporting entities.
To achieve that objective, the Disclosure Framework project comprises two components: the Board’s Decision Process and the Entity’s Decision Process.
Currently, four disclosure areas are being evaluated as part of the Disclosure Framework project. Each review will include (1) evaluation of existing disclosure requirements within the Topic after applying the concepts in the Board’s decision process and (2) promotion of the appropriate use of discretion by entities specifically within the Topic.
This page provides updates on the disclosure review of Income Taxes (740-10-50). For information on the other three disclosure reviews, see the following: Interim Reporting are being evaluated for modifications.
The FASB staff has developed a “Q&A: FASB’s Disclosure Framework Project” fact sheet which can be viewed here.
*Decisions Reached at Last Meeting (June 08, 2016)The Board completed its initial deliberations on the disclosure requirements for income taxes.
The Board reversed its previous decision and decided not to require an entity to disaggregate the cumulative amount of indefinitely reinvested foreign earnings for any country that represents at least 10 percent of the total cumulative amount. Instead, the Board decided to require disclosure of the aggregate of cash, cash equivalents, and marketable securities held by foreign subsidiaries.
Currently, some disclosure requirements in Topic 740, Income Taxes, are required of public entities and some are required of nonpublic entities. The Board decided to replace the term public entity with the term public business entity as defined in the Master Glossary of the Codification. The result is that some disclosures will be required of public business entities while other disclosures will be required of entities other than public business entities.
The Board decided to require an entity to disclose the terms of any rights or privileges granted by a governmental entity directly to the reporting entity that have reduced, or may reduce, the entity’s income tax burden.
The Board decided to revise the carryforward disclosure requirement in Topic 740 for a public business entity. A public business entity would be required to disclose:
- The amount of federal, state, and foreign carryforwards (not tax effected) by time period of expiration for each of the first five years after the reporting date and a total of the amounts for the remaining years.
- The deferred tax asset for carryforwards (tax effected) before valuation allowance disaggregated by federal, state, and foreign. Those amounts should be further disaggregated by time period of expiration for each of the first five years after the reporting date and a total of the amounts for the remaining years
The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot, with a comment period of 60 days or ending on September 30, 2016, whichever is longer.
*Tentative Board Decisions Reached to DateTentative Board Decisions Reached to Date
*Next StepsThe Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot, with a comment period of 60 days or ending on September 30, 2016, whichever is longer.
*Board/Other Public Meeting DatesThe Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
|*June 08, 2016||Board Meeting —Disclosure Review|
|March 23, 2016||Board Meeting—Disclosure Review|
|October 21, 2015||Board Meeting—Disclosure Review|
|August 26, 2015||Board Meeting—Disclosure Review|
|February 11, 2015||Board Meeting—Disclosure Review|
|January 7, 2015||Board Meeting—Disclosure Review|
|April 4, 2014||Board Meeting—Field Study Results and Next Steps|
Contact InformationNick Cappiello
Supervising Project Manager
Assistant Project Manager
Postgraduate Technical Assistant
Postgraduate Technical Assistant