The Financial Accounting Standards Board Essay

1377 Words null Page
Those who have sat through even the most introductory of tax courses know that the determination of income tax liability is not often a completely objective matter. It has become nearly impossible for the statutes, rulings, and cases to keep up with the ever-evolving business environment. In 2006, the Financial Accounting Standards Board (FASB) took a step towards curbing this ambiguity with the release of Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). This interpretation brought forth many changes with regards to how companies go about accounting for income tax expense and the related assets and liabilities that follow. These changes not only affected the companies enacting the new practices but also the auditors of such entities. According to the FIN 48 summary, the new interpretation “prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.” Ultimately, it has provided guidelines to serve as an addition to FASB Statement No. 109, Accounting for Income Taxes. These guidelines created a “two-step process” for evaluating uncertain tax positions. The first step in this process involves a “more-likely-than-not recognition threshold” in order to determine the need for recognition of tax liability and the recording of the related deferred tax assets or liabilities. It has also provided guidance regarding the treatment of tax…

Related Documents