Financial Reporting Standards

CHAPTER 8

Accounting for Postretirement Benefits and Income Taxes

Introduction

The accrual basis of accounting is consistently applied in accounting for postretirement benefits and income taxes. In the case of postretirement benefits, expense is recognized in the period of employee service to the corporation—not when the benefits are paid. In the case of accounting for income taxes, any tax effects of income statement items are recognized in the period they are included in the GAAP-based income statement, which may or may not be the period in which they are reported in the tax return. These topics are discussed together here due to some common characteristics:

1) Each may result in balance sheet presentation among either assets or liabilities, ...