BDO Knows ASC 740: New Income Tax Disclosures (ASU 2023-09)
The new income tax disclosures can be complex. Make sure you get it right using BDO's updated publication.
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Overview
The Washington National Tax Practice has released an updated publication: BDO Knows ASC 740 — New Income Tax Disclosures (ASU 2023-09).
BDO’s updated publication reflects observations from the first year of reporting under Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, and discusses application of the disclosure requirements by private entities.
ASU 2023-09 introduced new disclosure requirements for all entities, primarily related to the rate reconciliation and income taxes paid. For public business entities, ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, making the first filing cycle an important source of practical insights. For entities other than PBEs, the guidance is effective for fiscal years beginning after December 15, 2025. Early adoption is permitted.
The updated publication is intended to help engagement teams and clients understand not only the technical disclosure requirements, but also the implementation judgments, practical considerations and process implications that have emerged in practice. Key themes include establishing and documenting categorization policies, evaluating prospective versus retrospective adoption, preparing for jurisdictional income taxes paid disclosures, and identifying data and control changes needed to support the enhanced disclosures.