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SEC permits reasonable estimates in corporate tax reporting
Companies that are having trouble accounting for the effects of the recently enacted Tax Cuts and Jobs Act, P.L. 115-97, can report reasonable estimates for those effects in their financial statements for the reporting period in which the law was enacted, according to an SEC staff accounting bulletin.
The law was enacted Dec. 22, and the SEC issued Staff Accounting Bulletin No. 118 to guide reporting entities that do not have the necessary information available, prepared, or analyzed to complete the accounting under FASB ASC Topic 740, Income Taxes.
Under these circumstances, the SEC staff states that reporting provisional amounts based on reasonable estimates would be appropriate. In addition, if a reasonable estimate has been determined, it would not be appropriate to exclude that estimate from the financial statements, according to the SEC staff.
If an entity does not have the information to determine a reasonable estimate, the staff does not expect related provisional amounts to be included in an entity’s financial statements. In these cases, the staff wrote, the reporting entity should continue to apply Topic 740 based on the provisions of the tax laws that were in effect before the new law was enacted.
When a reporting entity’s accounting under Topic 740 is incomplete, the bulletin states that financial statement disclosures should include:
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director.
Research & References of SEC permits reasonable estimates in corporate tax reporting|A&C Accounting And Tax Services
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A note for you if you pursue CPA licence, KEEP PRACTICE with the MANY WONDER HELPS I showed you. Make sure to check your works after solving simulations. If a Cashflow statement or your consolidation statement is balanced, you know you pass right after sitting for the exams. I hope my information are great and helpful. Implement them. They worked for me. Hey.... turn gray hair to black also guys. Do not forget HEALTH?
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