Financial Accounting Standards Board

FINANCIAL ACCOUNTING STANDARDS BOARD Statement 109 This Statement establishes monetary yarding and reporting standards for the effects of income levy 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, chump for Income Taxes, and amends or supersedes other accounting pronouncements listed in appurtenant D. (www.fasb.org) ? FINANCIAL ACCOUNTING STANDARDS BOARD Statement 109 The reason FASB 109 was practice was because SFAS 96 and APBO 11 were confusing and time consuming. They employ the deferred regularity of accounting, thus the recognition and measurement of deferred income tax liabilities and assets were establish on the income direction approach. APBO 11 which was issued in 1967 required the deferral method of accounting for income taxes. Deferred inco me tax liabilities and assets atomic number 18 based on the income statement approach. This process ca apply deferred taxes to be removed from the deferred tax credit account at a rate that was a lot 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 dedicate 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 approac h is used in SFAS 109 where income tax get ! down is the result of some(prenominal) computations. Two major problems with SFAS 96 are the resulting complexity and wonder of the recognition and measurement of deferred tax assets and the required computer programing to determine the reversal of temporary differences. It is now believed that the scheduling weight has been reduced by the procedures that are now required. SFAS 96 in like manner would not allow...If you want to get a serious essay, assemble it on our website: OrderCustomPaper.com

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