UPDATE: FASB releases additional guidance on accounting for impacts of tax reform

The Financial Accounting Standards Board (FASB) has issued an Accounting Standards Update (ASU) and the FASB staff has issued several Staff Q&As that address various financial accounting and reporting impacts from the Tax Cuts and Jobs Act (TCJA). Companies should review this information and discuss the specific impacts on their organizations with their tax and accounting advisors.

UPDATE: ASU 2018-02, Accumulated Other Comprehensive Income

Accounting Standards Update, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02), gives companies the option to reclassify from accumulated other comprehensive income to retained earnings the stranded tax effects resulting from the TCJA. The ASU, finalized on Feb. 14, 2018, included a few significant changes from the previously issued exposure draft. The main provisions include the following:

• Allows for optional reclassification of stranded tax effects related to the TCJA
• When elected, requires all stranded tax effects related to the TCJA to be reclassified (i.e., including other income tax effects not specifically related to the change in rates)
• Entities electing to reclassify stranded tax effects related to the TCJA are required to disclose that the election was made, including a description of the other income tax effects, if any, related to the TCJA that were reclassified
• Entities not electing to reclassify stranded tax effects related to the TCJA are required to disclose, in the period of adoption, that the election was not made
• In addition, all entities are required to disclose their accounting policy for releasing income tax effects from accumulated other comprehensive income (i.e., including those income tax effects not related to the TCJA)
• Requires certain additional transitional disclosures
• Allows application at the beginning of the period of adoption (annual or interim) or retrospectively
• Effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after Dec. 15, 2018
• All entities, including public entities, that have not yet issued their financial statements may early adopt the standard