14.1 Overview
This chapter outlines the income tax accounting disclosures that
entities are required to provide in the notes to, and on the face of, the financial
statements. Appendix D
provides disclosure examples that may be helpful as the requirements outlined in
this chapter are considered. Disclosure requirements related to certain special
areas are addressed in other chapters of this Roadmap as follows:
- Chapter 7 — interim tax reporting.
- Chapter 8 — separate or carve-out financial statements (including abbreviated separate or carve-out financial statements).
- Chapter 11 — the effects of a business combination on an entity’s valuation allowance.
- Chapter 12 — noncontrolling interests, equity method investments, and QAHP investments, including specific exceptions in ASC 740 related to corporate joint ventures and changes in ownership of investees.
Changing Lanes
In December 2023, the FASB issued ASU 2023-09, which establishes new
income tax disclosure requirements within ASC 740 in addition to modifying
and eliminating certain existing requirements. The ASU’s amendments are
intended to enhance the transparency and decision-usefulness of such
disclosures. Under the new guidance, PBEs must consistently categorize and
provide greater disaggregation of information in the rate reconciliation.
The ASU also includes additional disaggregation requirements related to
income taxes paid. The ASU’s disclosure requirements apply to all entities
subject to ASC 740. PBEs must apply the amendments to annual periods
beginning after December 15, 2024 (2025 for calendar-year-end PBEs).
Entities other than PBEs have an additional year to adopt the guidance.
The disclosure guidance in this chapter reflects the requirements in
ASC 740 before the adoption of ASU 2023-09. For more information about the enhanced
disclosure requirements under the ASU, see Appendix B.