The bill proposes significant changes,
as discussed below, that, upon
enactment, will have pervasive
financial reporting implications, both
in the period of enactment and on a
prospective basis. For example, US
deferred taxes will need to be
remeasured as a result of the reduced
corporate income tax rate. For
companies with foreign operations,
mandatory taxation of deferred
foreign income, as well as various
provisions intended to prevent
erosion of the US tax base, may
impact measurement of deferred taxes
and taxes payable in the period of
enactment. Other changes, such as
elimination or limitation of certain
deductions, will impact both current
and deferred taxes on a prospective
basis. Changes in enacted tax law also
will require the reassessment of
realizability of deferred tax assets.
Companies will need to carefully
evaluate the impact that the changes
will have on their existing financial
statement positions, assertions, and
disclosures, in order to appropriately
account for changes in the period of
enactment. For many companies, this
assessment will be complex and will
require significant effort.
