Analyzing ASC 740 ETR Disclosure Requirements

If your company is required to provide an ETR disclosure under ASC 740, you can analyze the disclosure requirements using the ASC 740 Disclosure Analysis app. The disclosure app helps you determine what categories within the disclosure require disaggregation.

All amounts displayed include values from continuing operations only. The entities that contribute to each country are determined by:

• The country selected in the Entities editor, and
• Whether the entity is flagged as a discontinued operation, or not.

For each country you will see the following:

• U.S. Federal Statutory Rate
  This represents the total company net income before tax for continuing operations multiplied by the consolidated tax rate.
• State and Local Taxes, Net of Federal Income Tax Effect
• Foreign Rate Difference
  This represents the difference between the consolidated tax rate and the tax rate applied in the country.
• Effect of Changes in Tax Laws or Rates Enacted in the Period
• Effect of Cross-Broder Tax Laws
• Tax Credits
• Changes in Valuation Allowance
• Nontaxabale or Nondeductible Items
• Changes in Unrecognized Tax Benefits
• Other Adjustments

Depending on the configuration of your system, you may see additional categories displayed. Other than the U.S. Federal Statutory Rate, the make up of each of the categories is configured using accounts from the Consolidated ETR reporting hierarchy.

Percentages for each category are highlighted when they exceed the 5% threshold for disaggregation.

To review the ASC 740 analysis app:

1. In the Tax Provision navigation pane, click Reports.
2. Expand National Actual and Disclosures.
3. Use the drop-down list or the symbol selector to select the appropriate country. For more information, see Using the Symbol Selector.
4. Click ASC740 Disclosure Analysis.lvapp. The analysis app opens in the workspace.
5. For each country, the amount in each category is displayed along with its percentage impact on ETR to the expected tax expense.
6. When you are finished reviewing, close the app.