On October 24, 2016, the FASB (or the Board) issued Accounting Standards Update (ASU) 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. The Board issued the ASU as part of its simplification initiative aimed at reducing complexity in accounting standards. Under the current guidance, ASC 810-10-45-8 and ASC 740-10-25-3(e) prohibit immediate recognition of current and deferred income tax impact for intra-entity asset transfers. The ASU eliminates this prohibition for all intra-entity asset transfers, except for inventory.
The new guidance will be effective for public business entities in fiscal years beginning after December 15, 2017. For all other entities, the new guidance will be effective for fiscal years beginning after December 15, 2018. Early adoption is only permitted as of the beginning of an annual reporting period. The new guidance must be adopted using a modified retrospective transition.
US Tax Accounting Market Leader, PwC US