SEC Staff Announcement on Accounting for the Different Enactment Dates of the Health Care Reform Bill and Reconciliation Measure

Published on: 14 Apr 2010

At today’s FASB meeting, an SEC staff announcement was read regarding the potential impact that the different enactment dates of the Patient Protection and Affordable Care Act (the “Act”) and the Health Care and Education Reconciliation Act of 2010 (the “reconciliation measure”) may have on certain SEC registrants. The announcement highlights that ASC 740 requires the measurement of current and deferred taxes to be “based on the provisions of enacted tax law; the effects of future changes in tax laws are not anticipated.” Therefore, the different enactment dates of the Act and reconciliation measure may affect registrants with a period-end that falls between March 23, 2010 (enactment date of the Act), and March 30, 2010 (enactment date of the reconciliation measure). However, the announcement states that the SEC would not object if such registrants were to account for the enactment of both the Act and reconciliation measure in a period ending on or after March 23, 2010, but notes that the SEC staff “does not believe that it would be appropriate for registrants to analogize to this view in any other fact patterns.”

This draft SEC staff announcement is consistent with the SEC staff comments summarized in Financial Reporting Alert 10-3 (Revised), Health Care Legislation Eliminated Tax Deduction Related to Medicare Part D Subsidy — Potential Accounting Impact This Quarter, which addresses the accounting implications of the Act’s provision that eliminates the tax deduction for the portion of the prescription drug costs for which the employer receives a Medicare Part D subsidy (i.e., the “reduced deduction”).

After the Board meeting, the FASB issued Accounting Standards Update 2010-12, Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts, which revises the Codification’s SEC material to reflect this announce

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