Financial Accounting Standards Board

FINANCIAL ACCOUNTING STANDARDS BOARD Statement 109 This Statement establishes fiscal yarding and reporting standards for the effects of income assess 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, do for Income Taxes, and amends or supersedes other accounting pronouncements listed in appendage D. (www.fasb.org) ? FINANCIAL ACCOUNTING STANDARDS BOARD Statement 109 The reason FASB 109 was delectation was because SFAS 96 and APBO 11 were confusing and time consuming. They use the deferred system of accounting, thus the recognition and measurement of deferred income tax liabilities and assets were found on the income direction approach. APBO 11 which was issued in 1967 required the deferral invest of accounting for income taxes. Deferred income tax liabil ities and assets atomic number 18 based on the income statement approach. This process ca utilize deferred taxes to be removed from the deferred tax credit account at a rate that was frequently 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 put on 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 approach is use d 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 mix-up of the recognition and measurement of deferred tax assets and the required computer computer programing to determine the reversal of temporary differences. It is now believed that the scheduling kernel has been reduced by the procedures that are now required. SFAS 96 to a fault would not allow...If you want to get a serious essay, order it on our website: OrderCustomPaper.com

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