FASB Pronouncements & Interpretations

7/13/06
FASB Issues Interpretation No.48, Clarifying Accounting for Income Tax Uncertainty

The Financial Accounting Standards Board (FASB) today issued an interpretation that increases the relevancy and comparability of financial reporting by clarifying the way companies account for uncertainty in income taxes. Currently, the accounting for uncertainty in income taxes, which is based upon validity of a tax position, is subject to significant and varied interpretations that have resulted in diverse and inconsistent accounting practices and measurements.

The interpretation of FASB Statement No. 109, Accounting for Income Taxes prescribes a consistent recognition threshold and measurement attribute, as well as clear criteria for subsequently recognizing, derecognizing and measuring such tax positions for financial statement purposes. The Interpretation also requires expanded disclosure with respect to the uncertainty in income taxes. This Interpretation, which incorporates comments received from FASB constituents, as well as views expressed during a public roundtable, is effective for fiscal years beginning after December 15, 2006.

A Summary Text of Interpretation 48 is available at www.fasb.org under the caption, FASB Increases Relevance and Comparability of Financial Reporting of Income Taxes.  A full text is available here.

• FAS 109 Overview

For more info, click FAS 109.