FASB ISSUES STANDARD REDUCING COMPLEXITY
OF CLASSIFYING DEFERRED TAXES ON THE BALANCE SHEET
Norwalk, CT, November 20, 2015—The Financial Accounting
Standards Board (FASB) today issued an Accounting Standards Update
(ASU) intended to improve how deferred taxes are classified on
organizations’ balance sheets.
The Board is issuing this ASU as part of its simplification initiative
to reduce complexity in accounting standards. The ASU eliminates the
current requirement for organizations to present deferred tax
liabilities and assets as current and noncurrent in a classified balance
sheet. Instead, organizations will now be required to classify all
deferred tax assets and liabilities as noncurrent.
The amendments in this ASU apply to all organizations that present a classified balance sheet:
- For public companies, the amendments are
effective for financial statements issued for annual periods beginning
after December 15, 2016, and interim periods within those annual
periods.
- For private companies, not-for-profit organizations, and employee benefit plans,
the amendments are effective for financial statements issued for annual
periods beginning after December 15, 2017, and interim periods within
annual periods beginning after December 15, 2018.
Earlier application is permitted for all organizations as of the
beginning of an interim or annual reporting period. The ASU is available
for review at www.fasb.org.
About the Financial Accounting Standards Board
Established in 1973, the FASB is the independent, private-sector,
not-for-profit organization based in Norwalk, Connecticut, that
establishes financial accounting and reporting standards for public and
private companies and not-for-profit organizations that follow Generally
Accepted Accounting Principles (GAAP). The FASB is recognized by the
Securities and Exchange Commission as the designated accounting standard
setter for public companies. FASB standards are recognized as
authoritative by many other organizations, including state Boards of
Accountancy and the American Institute of CPAs (AICPA). The FASB
develops and issues financial accounting standards through a transparent
and inclusive process intended to promote financial reporting that
provides useful information to investors and others who use financial
reports. The Financial Accounting Foundation (FAF) supports and oversees
the FASB. For more information, visit www.fasb.org.