A new FASB standard issued Wednesday, Dec. 18, aims to simplify accounting for income taxes. The standard removes specific exemptions to the general principles of Income Taxes (Topic 740) in the FASB Accounting Standards Codification.
The standard eliminates the need for an organization to analyze whether certain exemptions apply in a given period. The amendments are also designed to improve financial statement preparers’ application of income tax-related guidance by simplifying areas of GAAP.
The standard takes effect for public business entities for fiscal years beginning after Dec. 15, 2020, and interim periods within those fiscal years. For all other entities, the amendments take effect for fiscal years beginning after Dec. 21, 2021, and interim periods within fiscal years after Dec. 15, 2022.