Financial Accounting Standards Board

FINANCIAL ACCOUNTING STANDARDS BOARD Statement 109 This Statement establishes fiscal yarding and reporting standards for the effects of income tax income incomees that result from an enterprises activities during the current and preceding years. It requires an asset and liability approach for monetary accounting and reporting for incomes taxes. This Statement supersedes FASB Statement No. 96, degree for Income Taxes, and amends or supersedes other accounting pronouncements listed in appendage D. (www.fasb.org) ? FINANCIAL ACCOUNTING STANDARDS BOARD Statement 109 The reason FASB 109 was substance abuse was because SFAS 96 and APBO 11 were confusing and time consuming. They employ the deferred system of accounting, thus the recognition and measurement of deferred income tax liabilities and assets were found on the income direction approach. APBO 11 which was issued in 1967 required the deferral method of accounting for income taxes. Deferred inc ome tax liabilities and assets atomic number 18 based on the income statement approach. This process ca utilize deferred taxes to be removed from the deferred tax credit account at a rate that was a great deal different from the rate that was originally recorded. The process was meaningless and was viewed as just a mechanical process.

The major purpose of SFAS96 was to admit the balance stable gear accounts for deferred taxes more meaningful in keeping with the FASBs conceptual framework. www.nysscpa.org The liability method was used to recognize and measure deferred tax liabilities and assets. The same approach is used in SFAS 109 where income ta! x get down is the result of several(prenominal) computations. Two major problems with SFAS 96 are the resulting complexity and confusedness of the recognition and measurement of deferred tax assets and the required computer computer programming to determine the reversal of temporary differences. It is now believed that the scheduling impression has been reduced by the procedures that are now required. SFAS 96 likewise would not allow...If you want to get a serious essay, enounce it on our website: OrderCustomPaper.com

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