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Journal entry — Disclosure framework — FASB makes tentative decisions about income tax disclosures related to undistributed foreign earnings

Published on: Feb 12, 2015

At its meeting yesterday, as part of its review of income tax disclosures, the FASB deliberated additional proposed disclosure requirements related to undistributed foreign earnings and tentatively decided that entities should:

  • Disclose information separately about the domestic and foreign components of income before income taxes. Further, entities should separately disclose income before income taxes of individual countries that are significant in relation to total income before income taxes. 

Editor’s Note: In ASC 740,1 income before income taxes is also referred to as pretax financial income.

  • Disclose the domestic tax expense recognized in the period related to foreign earnings.
  • Disclose unremitted foreign earnings that, during the current period, are no longer asserted to be indefinitely reinvested and an explanation of the circumstances that caused the entity to no longer assert that the earnings are indefinitely reinvested. These disclosures should be provided in the aggregate and for each country for which the amount no longer asserted to be indefinitely reinvested is significant in relation to the aggregate amount.
  • Separately disclose the accumulated amount of indefinitely reinvested foreign earnings for any country that is at least 10 percent of the aggregate amount.

The Board directed the staff to prepare examples of the proposed additional disclosures.

Next Steps

The FASB will continue to deliberate disclosures about income taxes at future meetings.

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1 FASB Accounting Standards Codification Topic 740, Income Taxes.

Disclosure framework — FASB makes tentative decisions about income tax disclosures related to undistributed foreign earnings Image

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