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Journal entry — Disclosure framework — FASB makes tentative decisions about income tax disclosures related to unrecognized tax benefits

Published on: Aug 28, 2015

At its meeting this week, as part of its review of financial statement disclosures about income taxes, the FASB discussed disclosure requirements related to unrecognized tax benefits and tentatively decided to:

  • Add a disclosure requirement within the tabular reconciliation1 to disaggregate settlements between cash and noncash (e.g., settlement by using existing net operating loss or tax credit carryforwards).
  • Add a disclosure requirement to provide a breakdown of the amount of total unrecognized tax benefits shown in the tabular reconciliation by the respective balance-sheet lines on which such unrecognized tax benefits are recorded.
  • Eliminate the requirement in ASC 740-10-50-15(d) for entities to provide details of positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease in the next 12 months.

Since the two new proposed disclosure requirements are related to the tabular reconciliation, they will only apply to public entities.

Next Steps

The FASB will continue to deliberate possible changes to requirements related to disclosures about income taxes at future meetings.

Editor’s Note: Upon completion of its review of income tax disclosure requirements, the FASB will issue a proposed Accounting Standards Update (ASU), which will be followed by a public comment period. Entities should continue to apply the current income tax disclosure requirements in ASC 740 until they are amended by a final ASU.

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1 See ASC 740-10-50-15A(a). For titles of FASB Accounting Standards Codification (ASC) references, see Deloitte’s "Titles of Topics and Subtopics in the FASB Accounting Standards Codification."

Journal entry — Disclosure framework — FASB makes tentative decisions about income tax disclosures related to unrecognized tax benefits Image

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