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FASB Statement No. 96, Accounting for Income Taxes FASB Statement No. 109, Accounting for Income Taxes FASB Statement No. 130, Reporting Comprehensive Income APB Opinion No. 11, Accounting for Income Taxes ISSUE In Issue No. 92-4, "Accounting for a Change

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Abstract

to Be Considered Highly Inflationary, " the Task Force reached a consensus that a change in functional currency from the reporting currency to the local currency when an economy ceases to be considered highly inflationary should be accounted for by establishing new functional currency bases for nonmonetary items. Those bases are computed by translating the historical reporting currency amounts of nonmonetary items into the local currency at current exchange rates. As a result of applying the consensus in Issue 92-4, the functional currency bases generally will exceed the local currency tax bases of nonmonetary items. The differences between the new functional currency bases and the tax bases represent temporary differences under Statement 109, for which deferred taxes must be recognized. The issue is whether under Statement 109 an entity should account for the income tax effects of a change in functional currency when an economy ceases to be considered highly inflationary as a charge to income tax expense or a charge to the cumulative translation adjustments component of shareholders ' equity. Copyright © 1992, Financial Accounting Standards Board Not for redistributio

Year: 1992
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