The Financial Accounting Standards Board (FASB) recently issued a proposed Accounting Standards Update (ASU), Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which would significantly expand the required disclosures around an entity’s rate reconciliation and income taxes paid. The proposed enhancements to income tax disclosures are intended to help users of the financial statements better assess how an entity’s worldwide operations and related tax risks, tax planning and operational opportunities affect its tax rate and prospects for future cash flows. Our article, ASC 740: FASB proposes new income tax disclosures, provides a summary of the proposed ASU’s key provisions.
If finalized, the proposed ASU would require retrospective application. Stakeholders are encouraged to review and provide comment on the FASB’s proposal by May 30, 2023.