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Fundamentals of Tax Accruals |
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Statement of Financial Accounting Standards (SFAS)109
So far, the focus of the tax accrual process has been placed squarely on the income statement by calculating the tax provision and the tax liability based upon pretax accounting income. In December 1987, the Financial Accounting Standards Board (FASB) issued SFAS 96, Accounting for Income Taxes, which was intended to change the focus from the income statement to the balance sheet.
SFAS 96, however, became a source of controversy because of its complexity and stringent deferred tax asset applications. In response to these concerns, the FASB issued SFAS 109, Accounting for Income Taxes, which reduced the cost and complexity of computing deferred income taxes under SFAS 96. While the current process for computing deferred taxes is a little easier under SFAS 109, the new emphasis on the balance sheet has made the tax accrual process very complex.
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Copyright © 1998 Bizzer Professional Training |
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