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i want minimum 900 words written!use ONLY the article provided and cite in text from this articleread the instructions in the attachmentsPlease see the following attachments everything is included in there. Also Thats the article we have to use for the article and the rubric of the assignment rubric.jpg rubric_1.jpg rubric_3.jpg acct601_week_2_written_assignment.docx week_2_assignment.pdf Unformatted Attachment Preview Week 2 Current Issues Paper Written Assignment Find and search any website that discusses topics pertinent to FASB, SEC, IFRS, or anything related. Specifically, describe and discuss the changes that have occurred within the prior 12 months in the standards and rulings issued by one of these standard setting bodies. You could also incorporate the standards that are being contemplated through pending discussion exposure documents. Your paper should be a minimum of five to eight pages, including a cover page and bibliography. The font size should be 12-point and the type can be Times New Roman, Verdana, or Arial. Your paper should be properly cited using APA referencing style. This means that citations should be in a bibliography and in the body of the paper wherever you refer to or directly quote any information or terms from other sources. You should include a minimum of three references in your paper. This paper is a research paper—you need to learn something new from this assignment, not just provide your ideas about your experience. Please submit your paper no later than midnight Sunday at the end of Week 2. No. 2019-12 December 2019 Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes An Amendment of the FASB Accounting Standards Codification® The FASB Accounting Standards Codification® is the source of authoritative generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. An Accounting Standards Update is not authoritative; rather, it is a document that communicates how the Accounting Standards Codification is being amended. It also provides other information to help a user of GAAP understand how and why GAAP is changing and when the changes will be effective. For additional copies of this Accounting Standards Update and information on applicable prices and discount rates contact: Order Department Financial Accounting Standards Board 401 Merritt 7 PO Box 5116 Norwalk, CT 06856-5116 Please ask for our Product Code No. ASU2019-12. FINANCIAL ACCOUNTING SERIES (ISSN 0885-9051) is published monthly with the exception of February, March, July, September, October, and November by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116. Periodicals postage paid at Norwalk, CT and at additional mailing offices. The full subscription rate is $312 per year. POSTMASTER: Send address changes to Financial Accounting Series, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116. | No. 491 Copyright © 2019 by Financial Accounting Foundation. All rights reserved. Content copyrighted by Financial Accounting Foundation may not be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the Financial Accounting Foundation. Financial Accounting Foundation claims no copyright in any portion hereof that constitutes a work of the United States Government. Accounting Standards Update No. 2019-12 December 2019 Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes An Amendment of the FASB Accounting Standards Codification® Financial Accounting Standards Board Accounting Standards Update 2019-12 Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes December 2019 CONTENTS Page Numbers Summary ...........................................................................................................1–3 Amendments to the FASB Accounting Standards Codification® .....................5–25 Background Information and Basis for Conclusions ......................................26–42 Amendments to the XBRL Taxonomy .................................................................43 Summary Why Is the FASB Issuing This Accounting Standards Update (Update)? The Board is issuing this Update as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The specific areas of potential simplification in this Update were submitted by stakeholders as part of the Simplification Initiative. Who Is Affected by the Amendments in This Update? The amendments in this Update affect entities within the scope of Topic 740, Income Taxes. What Are the Main Provisions? The amendments in this Update simplify the accounting for income taxes by removing the following exceptions: 1. Exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items (for example, discontinued operations or other comprehensive income) 2. Exception to the requirement to recognize a deferred tax liability for equity method investments when a foreign subsidiary becomes an equity method investment 3. Exception to the ability not to recognize a deferred tax liability for a foreign subsidiary when a foreign equity method investment becomes a subsidiary 4. Exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. The amendments in this Update also simplify the accounting for income taxes by doing the following: 1. Requiring that an entity recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax. 1 2. 3. 4. 5. Requiring that an entity evaluate when a step up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction. Specifying that an entity is not required to allocate the consolidated amount of current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements. However, an entity may elect to do so (on an entity-by-entity basis) for a legal entity that is both not subject to tax and disregarded by the taxing authority. Requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. Making minor Codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method. How Do the Main Provisions Differ from Current Generally Accepted Accounting Principles (GAAP) and Why Are They an Improvement? The amendments in this Update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. When Will the Amendments Be Effective and What Are the Transition Requirements? For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted, including adoption in any interim period for (1) public business entities for periods for which financial statements have not yet been issued and (2) all other entities for periods for which financial statements have not yet been made available for issuance. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. 2 The amendments in this Update related to separate financial statements of legal entities that are not subject to tax should be applied on a retrospective basis for all periods presented. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments should be applied on a prospective basis. 3 Amendments to the FASB Accounting Standards Codification® Introduction 1. The Accounting Standards Codification is amended as described in paragraphs 2–23. In some cases, to put the change in context, not only are the amended paragraphs shown but also the preceding and following paragraphs. Terms from the Master Glossary are in bold type. Added text is underlined, and deleted text is struck out. Amendment to Master Glossary 2. Supersede the Master Glossary term Tax Consequences from Subtopic 740-20 as follows: Tax Consequences The effects on income taxes—current or deferred—of an event. Amendments to Subtopic 740-10 3. Amend paragraph 740-10-15-4, with a link to transition paragraph 740-1065-8, as follows: Income Taxes—Overall Scope and Scope Exceptions > Transactions 740-10-15-4 The guidance in this Topic does not apply to the following transactions and activities: a. A franchise tax (or similar tax) to the extent it is based on capital or a nonincome-based amount and there is no additionalportion of the tax based on income. If there is an additional tax based on income, that excess is considered an income tax and is subject to the guidance in this Topic.If a franchise tax (or similar tax) is partially based on income (for example, an entity pays the greater of an income-based tax and a non-income-based 5 b. tax), deferred tax assets and liabilities shall be recognized and accounted for in accordance with this Topic. Deferred tax assets and liabilities shall be measured using the applicable statutory income tax rate. An entity shall not consider the effect of potentially paying a non-income-based tax in future years when evaluating the realizability of its deferred tax assets. The amount of current tax expense equal to the amount that is based on income shall be accounted for in accordance with this Topic, with any incremental amount incurred accounted for as a non-income-based tax. See Example 17 (paragraph 740-10-55-139) for an example of how to apply this guidancethe determination of whether a franchise tax is an income tax. A withholding tax for the benefit of the recipients of a dividend. A tax that is assessed on an entity based on dividends distributed is, in effect, a withholding tax for the benefit of recipients of the dividend and is not an income tax if both of the following conditions are met: 1. The tax is payable by the entity if and only if a dividend is distributed to shareholders. The tax does not reduce future income taxes the entity would otherwise pay. 2. Shareholders receiving the dividend are entitled to a tax credit at least equal to the tax paid by the entity and that credit is realizable either as a refund or as a reduction of taxes otherwise due, regardless of the tax status of the shareholders. See the guidance in paragraphs 740-10-55-72 through 55-74 dealing with determining whether a payment made to a taxing authority based on dividends distributed is an income tax. 4. Amend paragraph 740-10-25-54, with a link to transition paragraph 740-1065-8, as follows: Recognition > Transactions Directly between a Taxpayer and a Government 740-10-25-53 Transactions directly between a taxpayer and a government (in its capacity as a taxing authority) shall be recorded directly in income (in a manner similar to the way in which an entity accounts for changes in tax laws, rates, or other tax elections under this Subtopic). (See Example 26 [paragraph 740-10-55202] for an illustration of a transaction directly with a governmental taxing authority.) 740-10-25-54 An entity shall determine whether a step up in the tax basis of goodwill relates to the business combination in which the book goodwill was originally recognized or whether it relates to a separate transaction. In situations in which the tax basis step up relates to the business combination in which the 6 book goodwill was originally recognizedthat was previously not deductible, no deferred tax asset would be recorded for the increase in basis except to the extent that the newly deductible goodwill amount exceeds the remaining balance of book goodwill. In situations in which the tax basis step up relates to a separate transaction, a deferred tax asset would be recorded for the entire amount of the newly created tax goodwill in accordance with this Subtopic. Factors that may indicate that the step up in tax basis relates to a separate transaction include, but are not limited to, the following: a. b. c. d. e. f. A significant lapse in time between the transactions has occurred. The tax basis in the newly created goodwill is not the direct result of settlement of liabilities recorded in connection with the acquisition. The step up in tax basis is based on a valuation of the goodwill or the business that was performed as of a date after the business combination. The transaction resulting in the step up in tax basis requires more than a simple tax election. The entity incurs a cash tax cost or sacrifices existing tax attributes to achieve the step up in tax basis. The transaction resulting in the step up in tax basis was not contemplated at the time of the business combination. 5. Add paragraph 740-10-30-27A, with a link to transition paragraph 740-10-658, as follows: Initial Measurement > Allocation of Consolidated Tax Expense to Separate Financial Statements of Members 740-10-30-27 The consolidated amount of current and deferred tax expense for a group that files a consolidated tax return shall be allocated among the members of the group when those members issue separate financial statements. This Subtopic does not require a single allocation method. The method adopted, however, shall be systematic, rational, and consistent with the broad principles established by this Subtopic. A method that allocates current and deferred taxes to members of the group by applying this Topic to each member as if it were a separate taxpayer meets those criteria. In that situation, the sum of the amounts allocated to individual members of the group may not equal the consolidated amount. That may also be the result when there are intra-entity transactions between members of the group. The criteria are satisfied, nevertheless, after giving effect to the type of adjustments (including eliminations) normally present in preparing consolidated financial statements. 7 740-10-30-27A An entity is not required to allocate the consolidated amount of current and deferred tax expense to legal entities that are not subject to tax. However, an entity may elect to allocate the consolidated amount of current and deferred tax expense to legal entities that are both not subject to tax and disregarded by the taxing authority (for example, disregarded entities such as single-member limited liability companies). The election is not required for all members of a group that files a consolidated tax return; that is, the election may be made for individual members of the group that files a consolidated tax return. An entity shall not make the election to allocate the consolidated amount of current and deferred tax expense for legal entities that are partnerships or are other passthrough entities that are not wholly owned. 6. Add paragraph 740-10-50-17A, with a link to transition paragraph 740-10-658, as follows: Disclosure > Entities with Separately Issued Financial Statements That Are Members of a Consolidated Tax Return 740-10-50-17 An entity that is a member of a group that files a consolidated tax return shall disclose in its separately issued financial statements: a. b. The aggregate amount of current and deferred tax expense for each statement of earnings presented and the amount of any tax-related balances due to or from affiliates as of the date of each statement of financial position presented The principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to members of the group and the nature and effect of any changes in that method (and in determining related balances to or from affiliates) during the years for which the above disclosures are presented. 740-10-50-17A An entity that is both not subject to tax and disregarded by the taxing authority that elects to include the allocated amount of current and deferred tax expense in its separately issued financial statements in accordance with paragraph 740-10-30-27A shall disclose that fact and provide the disclosures required by paragraph 740-10-50-17. 7. Amend paragraphs 740-10-55-26 and 740-10-55-139 through 55-144, with a link to transition paragraph 740-10-65-8, as follows: Implementation Guidance and Illustrations > Implementation Guidance 8 > > Application of Accounting Requirements for Income Taxes to Specific Situations > > > Measurement of Deferred Tax Liabilities and Assets > > > > State and Local Income Taxes 740-10-55-26 Local (including franchise) taxes based on income are within the scope of this Topic. A tax, to the extent it is based on capital, is a franchisenonincome-based tax. As indicated in paragraph 740-10-15-4(a), if there is an additional taxamount of a franchise tax based on income, that excessamount is considered an income tax. Any additional amount incurred is considered a nonincome-based tax. AnA historical example that illustrates this guidance is presented in Example 17 (see paragraph 740-10-55-139). > Illustrations > > Example 17: Determining Whether a Tax Is an Income Tax 740-10-55-139 The guidance in paragraph 740-10-55-26 addressing when a tax is an income tax is illustrated using the following historical example. 740-10-55-140 In August 1991, a state amended its franchise tax statute to include a tax on income apportioned to the state based on the federal tax return. The new tax was effective January 1, 1992. The amount ofA state’s franchise tax on each corporation iswas set at the greater of 0.25 percent of the corporation’s net taxable capital and 4.5 percent of the corporation’s net taxable earned surplus. Net taxable earned surplus iswas a term defined by the tax statute for federal taxable income. 740-10-55-141 In this Example, the total computed tax is an income tax only to the extent that the tax exceeds the capital-based tax in a given yearamount of franchise tax equal to the tax on the corporation’s net taxable earned surplus is an income tax. 740-10-55-142 A deferred tax liability isDeferred tax assets and liabilities are required to be recognized under this Subtopic for the amount by which the incomebased tax payable on net reversing temporary differences that exist as of the date of the statement of financial position using the tax rate to be applied to the corporation’s net taxable earned surplus (4.5 percent)in each future year exceeds the capital-based tax computed for each future year based on the level of capital that exists as of the end of the year for which deferred taxes are being computed. 740-10-55-143 The portion of the current tax ... 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