Statement Of Financial Accounting Standards No. 109

Statement of Financial Accounting Standards No. 109 FAS109 Status Page FAS109 Summary Accounting for Income Taxes February 1992 Financial Accounting Standards Board of the Financial Accounting Foundation 401 MERRITT 7, P.O. BOX 5116, NORWALK, CONNECTICUT 06856-5116 Copyright © 1992 by Financial Accounting Standards Board. All rights reserved. No part of this publication may 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 Standards Board. Page 2 Statement of Financial Accounting Standards No. 109 Accounting for Income Taxes February 1992 CONTENTS Paragraph Numbers Introduction .................................................................................................................. 1–2 Standards of Financial Accounting and Reporting: Scope ...................................................................................................................... 3–5 Objectives and Basic Principles

........................................................................... 6–15 Temporary Differences................................................................................. 10–15 Recognition and Measurement........................................................................... 16–34 Annual Computation of Deferred Tax Liabilities and Assets ...................... 17–25 A Change in the Valuation Allowance............................................................... 26 An Enacted Change in Tax Laws or Rates......................................................... 27 A Change in the Tax Status of an Enterprise ..................................................... 28 Regulated Enterprises......................................................................................... 29 Business Combinations ...................................................................................... 30 Opinion 23 and U.S. Steamship Enterprise Temporary Differences............ 31–34 Intraperiod Tax Allocation ................................................................................. 35–39 Certain Quasi Reorganizations........................................................................... 39 Separate Financial Statements of a Subsidiary......................................................... 40 Financial Statement Presentation ....................................................................... 41–42 Financial Statement Disclosure.......................................................................... 43–49 Effective Date and Transition............................................................................. 50–59 Prior Business Combinations ....................................................................... 53–56 Assets of Regulated Enterprises Reported on a Net-of-Tax or After-Tax Basis...................................................................................... 57–59 Appendix A: Basis for Conclusions...................................................................... 60–222 Appendix B: Application of the Standards to Specific Aspects of Accounting for Income Taxes .......................................................... 223–276 Appendix C: Background Information................................................................ 277–285 Appendix D: Amendments to Existing Pronouncements.................................... 286–288 Appendix E: Glossary ................................................................................................. 289 Page 3 Copyright © 1992, Financial Accounting Standards Board Not for redistribution FAS 109: Accounting for Income Taxes FAS 109 Summary This Statement establishes financial accounting and reporting standards for the effects of income taxes that result from an enterprise's activities during the current and preceding years. It requires an asset and liability approach for financial accounting and reporting for income taxes. This Statement supersedes FASB Statement No. 96, Accounting for Income Taxes, and amends or supersedes other accounting pronouncements listed in Appendix D. Objectives of Accounting for Income Taxes The objectives of accounting for income taxes are to recognize (a) the amount of taxes payable or refundable for the current year and (b) deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an enterprise's financial statements or tax returns. Basic Principles of Accounting for Income Taxes The following basic principles are applied in accounting for income taxes at the date of the financial statements: a. A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the current year. b. A deferred tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences and carryforwards. c. The measurement of current and deferred tax liabilities and assets is based on provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated. d. The measurement of deferred tax assets is reduced, if necessary, by...

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