FASB Working to Fix Inconsistencies of U.S. GAAP
The Financial Accounting Standards Board (“FASB”) has released a proposed Accounting Standards Update to eliminate inconsistencies in parts of the U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). Impacting various areas in the FASB Accounting Standards Codification, the proposed changes will apply to all reporting entities within the scope of the related accounting guidance. Some of the amendments under Proposed Accounting Standards Update No. 2017-320 Codification Improvements, impact:
- Subtopic 718-740, Compensation—Stock Compensation—Income Taxes: The FASB proposes clarifying that an entity must disclose excess tax benefits (or tax deficiencies) in the reporting period when the tax deduction for compensation expense is taken on its tax return. This includes deductions taken in a different period from when the event that creates the tax deduction transpires and the uncertainty regarding whether the entity:
- Will receive a tax deduction; and
- The amount of the tax deduction is determined.
- Subtopic 805-740, Business Combinations—Income Taxes: The FASB proposes eliminating three methods for allocating the consolidated tax requirement to an acquired entity following acquisition that is inconsistent with the guidance under Topic 740.
- Subtopic 820-10, Fair Value Measurement—Overall: The FASB proposes clarifying its decisions on the fair value measurement of a liability or instrument categorized in an entity’s shareholder’s equity from the view of a market participant that holds an item similar to an asset at the measurement date.
Comments on the proposal are due by Monday, December 4.