Acct 540 Week 1

ACCT 540 Week 1

FASB Accounting Standard Update No. 2013-11

Topic: Income Taxes (740)

Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carry-forward, a Similar Tax Loss, or a Tax Credit Carry-forward Exists

Prior to this update, U.S. GAAP did not provide clear guidance on how to present an unrecognized tax benefit “when a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward exists” (FASB, ASU No. 2013-11). The intention of this update is to remove the problem of diversity in practice.

In order to do this the FASB added new provisions. An unrecognized tax benefit should be presented in the financial statements as a “reduction to a deferred tax asset” for a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward. If the net operating loss carry-forward, similar tax loss, or tax credit carry-forward isn’t available on the reporting date under the tax law of the appropriate jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the correct jurisdiction does not insist the entity to use, and entity chooses not to use the deferred tax asset for that purpose, then the unrecognized tax benefit would be presented as a “liability” on the financial statements and should not be combined with the “deferred tax” assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and needs to be made presuming disallowance of the position at the reporting date. (FASB ASU No. 2013-11)

FASB Accounting Standard Update No. 2013-10

Topic: Derivatives and Hedging (815)

Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes

As of right now, the only interest rates on direct Treasury obligations is the United States government (UST) and the London...