In November 2015, the FASB issued Accounting Standards Update (ASU) 2015-17, Income Taxes (Topic740): Balance Sheet Classification of Deferred Taxes, to simplify the presentation of deferred income taxes. Under current GAAP when a classified balance sheet is presented, deferred tax liabilities and assets are separated into a current amount and a noncurrent amount generally on the basis of the classification of the related asset or liability for financial reporting. The Board determined that the current presentation under GAAP does not provide users of financial statements with useful information as the classification between current and noncurrent generally does not reflect when a temporary difference will reverse and become a taxable or deductible item.
The amendments in the ASU require that deferred tax liabilities and assets be classified as noncurrent and applies to all entities that present a classified balance sheet or statement of financial position. This ASU does not affect the current requirement that deferred tax liabilities and assets within a tax-paying component of an entity be offset and presented as a single amount but that deferred taxes of one tax-paying component should not be offset against the deferred taxes of another tax-paying component. The amendments also will align GAAP with presentation of deferred income tax assets and liabilities with International Financial Reporting Standards (IFRS).
For public entities, the amendments in the ASU are effective for financial statements issued for annual periods beginning after Dec. 15, 2016, and interim periods within those annual periods.
For nonpublic entities, the amendments in the ASU are effective form financial statements issued for annual periods beginning after Dec. 15, 2017, and interim periods within annual periods beginning after Dec.15, 2018.
Early application is permitted and the amendments may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented.
Wednesday, April 24, 2019 | 7:30 AM – 9:30 AM EDT | The Hartford Club