During the 5 October 2015 Board meeting, the Financial Accounting Standards Board (‘FASB’) discussed external feedback received and began redeliberations on two proposed ASU’s:
- Income Taxes (Topic 740): Intra-Entity Asset Transfers, and
- Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.
In evaluating the intra-entity asset transfers topic, the Board asked the staff to conduct further research. Specifically, the staff will research the cost and benefits associated with applying the exception which currently exists in GAAP to inventory only, with the Board looking to ultimately consider the ASU as currently drafted, or to modify the ASU to clarify that the exception to recording deferred taxes for intra-entity transfers only applies to inventory.
With respect to the balance sheet classification of deferred taxes – i.e. all deferred income tax assets and liabilities will have to be presented as non-current – the Board asked the staff to draft a final ASU based on the decisions reached at its 5 October meeting.
PwC drafted an article that briefly discusses the content of the redeliberated ASU’s, their importance and the way forward.