Accounting Standards Update likely to lower costs and complexity
The FASB released Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, on Dec. 18, 2019. The guidance is likely to lower the cost and complexity associated with accounting for income taxes.
In our New Developments Summary, we review how this new guidance advances the FASB’s initiative of simplifying various topics through a series of short-term projects. The review of the ASU includes examinations of these themes:
- The removal of certain exceptions to the general principles in Topic 740, Income Taxes.
- The improvement of how financial statement preparers apply income tax-related guidance and simplification of GAAP.
Additionally, the ASU also clarifies existing guidance with respect to the tax benefit of tax-deductible dividends on employee stock ownership plan shares and corrects a computational error in an example in ASC 323-740.
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