Project Update

Disclosure Framework—Disclosure Review: Income Taxes

Last updated on March 20, 2015. 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 Overview
*Decisions Reached at Last Meeting
*Tentative Board Decisions Reached to Date
Next Steps
*Board/Other Public Meeting Dates
Contact Information
 

*Project Objective and Overview

The objective and primary focus of the Disclosure Framework project is to improve the effectiveness of disclosures in 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 will require development of a framework that promotes consistent decisions about disclosure requirements by the Board and the appropriate exercise of discretion by reporting entities.

The objective of improving effectiveness will require 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 this 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:
  1. Defined Benefit Plans (715-20-50)
  2. Fair Value Measurement (820-10-50)
  3. Inventory (330-10-50)
Additionally, disclosure requirements for 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 (February 11, 2015)

The Board began its review of disclosures related to income taxes, focusing on disclosures related to undistributed foreign earnings.

The Board decided that entities would be required to disclose the following:
  1. Income before taxes disaggregated between domestic and foreign earnings. Foreign earnings would be further disaggregated for any country that is significant to total earnings.
  2. Domestic tax expense recognized in the period for taxes on foreign earnings.
  3. Undistributed foreign earnings that are no longer asserted to be indefinitely reinvested during the current period and an explanation of the circumstances that cause the entity to make that assertion. Separate disclosure should be made for any country that is significant to the disclosed amount.
  4. A further disaggregation of the current requirement to disclose the temporary difference for the cumulative amount of indefinitely reinvested foreign earnings if any country represents at least 10 percent of the disclosed amount.
The Board decided not to require disclosure of:
  1. Disaggregation of deferred tax liabilities (DTL) recorded for unremitted foreign earnings by country.
  2. An estimate of the unrecognized DTL on the basis of simplified assumptions.
  3. Past events or current conditions that have changed management’s plans for undistributed foreign earnings.

*Tentative Board Decisions Reached to Date

Tentative Board Decisions Reached to Date

Next Steps

The Board will discuss potential changes to the Topic disclosures on the basis of the concepts and decision questions in the recently issued proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting Chapter 8: Notes to Financial Statements in a future decision-making meeting.

*Board/Other Public Meeting Dates

The 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.

*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 Information

Nick Cappiello
Project Manager
ntcappiello@fasb.org

Jaime Dordik
Assistant Project Manager
jadordik@fasb.org

Kelsey Jensen
Postgraduate Technical Assistant
kpjensen@fasb.org

Kristin Floyd
Postgraduate Technical Assistant
knfloyd@fasb.org