: Describe the current convergence efforts of the FASB and IASB in accounting for taxes.

A business's tax responsibility to the government in which it operates is known as "income tax payable." A business's profits will determine the amount owed over a given period and the tax rates imposed.Tax payable is a debt that must be paid within the next 12 months. Thus, it is not considered a long-term responsibility but rather a current one.

The IASB and FASB have been working together to resolve some disparities in income tax accounting. The phrase "probable" under IFRS for recognition of a deferred tax asset, which might be taken to imply "more likely than not," is one of the topics up for debate. If the rules are altered, GAAP and IFRS will record impairments of deferred tax assets in roughly the same way. In addition, the IASB is contemplating adopting the categorization technique for deferred tax assets and liabilities that are used in GAAP.

In addition, GAAP will very certainly continue to utilize the enacted tax rate in calculating deferred taxes unless the taxing jurisdiction is not the United States. Companies should adopt the International Financial Reporting Standards (IFRS), proven or primarily implemented tax rates in this scenario to achieve convergence. The problem of allocating deferred income taxes to equity under IFRS for specific transactions must be addressed. Deliberations on the Income Tax Project have been halted indefinitely at the time of this publishing.