Magazine article The CPA Journal

FASB Proposes "Son of 96"

Magazine article The CPA Journal

FASB Proposes "Son of 96"

Article excerpt

FASB has taken a fresh approach to accounting for income taxes and has recently issued an exposure draft of a new statement. To allow for the operation of due process, a second exposure draft was issued that delays the effective date of SFAS 96 until after the expected issuance of the new statement.

The new ED has good news in that it would permit the recognition of a deferred tax asset for items that are current expenses for financial reporting but will not be deductible for income tax purposes until some future period. Under SFAS 96 such assets would not have been recognized. As a result the tax benefit for providing for the accrual of retirement benefits other than pensions, even though not currently deductible for tax purposes, would be recorded. That deferred tax asset would be aggregated with others and would be subject to a realizability test under a more likely than not reasoning. …

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