Accounting for Income Taxes — FASB ASC 740 (Portfolio 5000)
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This Tax Management Portfolio focuses on the standards established by FASB Statement No. 109 for financial accounting and reporting of income taxes and provides a comprehensive summary of the rules.
Description
This guide is designed to summarize the accounting literature related to accounting for income taxes.
Accounting Standards Codification Topic 740 includes financial accounting and reporting guidance for the effects of income taxes that result from an entity’s activities during the current and preceding years. It codified the guidance that was previously included in Statement 109, APB 23 and other FASB statements and EITF consensuses.
This publication has been updated for EY interpretative guidance through October 2017. We have updated and expanded our guidance covering a variety of topics including foreign and domestic subsidiary temporary differences, intercompany transactions, valuation allowances, business combinations, intraperiod tax allocation, balance sheet presentation, share-based payment issues, and allocation methods for separate financial statements of a subsidiary. Updated and expanded sections are indicated in the respective heading as well as in Appendix D.
Excerpts from, and references to, the Accounting Standards Codification are contained within this guide. Guidance that may still be applicable but is based on non-authoritative standards not included in the FASB’s Accounting Standards Codification is included in an appendix.
EY professionals are prepared to help you identify and understand the issues related to income taxes. In addition, our audit and tax professionals would be pleased to discuss with you any other issues related to your tax and financial reporting needs.
Learn about our smarter, faster approach for calculating corporate income tax provision under ASC 740.
Table of Contents
I. Introduction
II. Scope
III. Objectives and Basic Principles
IV. Temporary Differences
V. Recognition and Measurement
VI. Valuation Allowance
VII. A Change in the Valuation Allowance
VIII. An Enacted Change in Tax Laws or Rates
IX. Change in the Tax Status of an Entity
X. Regulated Entities
XI. Business Combinations
XII. Non-controlling Interests
XIII. Asset Acquisitions
XIV. Foreign and Domestic Subsidiaries and US Steamship Entity Temporary
XV. Intra-period Tax Allocation
XVI. Reorganizations
XVII. Separate Financial Statements of a Subsidiary
XVIII. Financial Statement Presentation
XIX. Accounting for Uncertainty in Income Taxes
XX. Interim Reporting
XXI. Share-based payment (prior to the adoption of ASU 2016-09)
XXII. Share-Based Payment (following the adoption of ASU 2016-09)
Ernst & Young LLP