FASB's New Standard for Classifying Deferred Taxes

An Expedient Solution

Charles E. Jordan, DBA, CPA

For companies issuing classified balance sheets, current U.S. GAAP requires deferred taxes to be reported in two amounts (i.e., the net current deferred tax asset or liability and the net noncurrent deferred tax asset or liability). Generally, the classification of a deferred tax account as current or noncurrent hinges on the classification of the asset or liability that gave rise to it. Any deferred tax account not arising from a specific asset or liability is classified as current or noncurrent based on its expected reversal date.