The Financial Accounting Standards Board issued an interpretation that clarifies the way companies account for uncertainty in income taxes.
Accounting for uncertainty in income taxes -- which is based upon validity of a tax position -- is now subject to a number of interpretations that have resulted in diverse and inconsistent accounting practices and measurements. The hope is that the new guidance will increase the relevancy and comparability of financial reporting and will also likely lead to companies now disclosing, "more likely than not" tax positions, which, encompass a wide range of positions with so much uncertainty that a company does not take a full financial benefit on statements.
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