Financial Accounting Standards Board

FINANCIAL ACCOUNTING STANDARDS BOARD
Statement 109

This Statement establishes monetary yarding and reporting standards for the effects of income tax incomees that result from an enterprises activities during the current and preceding years. It requires an asset and liability approach for financial accounting and reporting for incomes taxes. This Statement supersedes FASB Statement No. 96, score for Income Taxes, and amends or supersedes other accounting pronouncements listed in adjunct D. (www.fasb.org)

?
FINANCIAL ACCOUNTING STANDARDS BOARD
Statement 109

The reason FASB 109 was use was because SFAS 96 and APBO 11 were confusing and time consuming. They used the deferred regularity of accounting, thus the recognition and measurement of deferred income tax liabilities and assets were based on the income direction approach.
APBO 11 which was issued in 1967 required the deferral method of accounting for income taxes. Deferred income tax liabilities and assets atomic number 18 based on the income statement approach. This process caused deferred taxes to be removed from the deferred tax credit account at a rate that was often 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 make 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 tax get down is the result of several computations. Two major problems with SFAS 96 are the resulting complexity and confusion of the recognition and measurement of deferred tax assets and the required computer programming to determine the reversal of temporary differences. It is now believed that the scheduling burden has been reduced by the procedures that are now required. SFAS 96 also would not allow...If you want to get a serious essay, order it on our website: Orderessay



If you want to get a full essay, wisit our page: write my essay .