# ASC 270-740-30: Interim Reporting — Income Taxes — 30 Initial Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/270/740/#30-initial-measurement) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:42619c8857a64a7dbe8e221cab5bbf2c1dc4638ff9564192bf54e694341568fb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 270-740-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/270/740/#30-initial-measurement) SEC content: no #### General Methodology and Use of Estimated Annual Effective Tax Rate ##### [270-740-30-1](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:e6de126c2a3e3a1a1ee0274dd25d7a3690baf2b314ee7e5939a868777ea76957 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance establishes the methodology, including the use of an estimated annual effective tax rate, to determine [income tax expense (or benefit)](https://asc.understandingaccounting.org/glossary/i/#income-tax-expense-or-benefit "The sum of current tax expense (or benefit) and deferred tax expense (or benefit).") in interim financial information. ##### [270-740-30-2](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:a8042ccb5ae77d02b4f0397481dba052953765fd3cd34d687e493ee6a819e46b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In reporting interim financial information, income tax provisions shall be determined under the general requirements for accounting for [income taxes](https://asc.understandingaccounting.org/glossary/i/#income-taxes "Domestic and foreign federal (national), state, and local (including franchise) taxes based on income.") set forth in Subtopic 740-10. ##### [270-740-30-3](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:65c5de2faa0ee47eb33c67ebbbb74973713b6adebd50df29a00c0060fd21d319 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Income tax expense (or benefit) for an interim period is based on income taxes computed for ordinary income or loss and income taxes computed for items or events that are not part of ordinary income or loss. ##### [270-740-30-4](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:ce7c2efc96c1cdfc989054d585f37af8c0bc5405268443321b014367ad40852b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-270-25-2](https://asc.understandingaccounting.org/asc/270/740/#270-740-25-2) requires that the [tax (or benefit)](https://asc.understandingaccounting.org/glossary/t/#tax-or-benefit "Tax (or benefit) is the total income tax expense (or benefit), including the provision (or benefit) for income taxes both currently payable and deferred.") related to [ordinary income (or loss)](https://asc.understandingaccounting.org/glossary/o/#ordinary-income-or-loss "Ordinary income (or loss) refers to income (or loss) from continuing operations before income taxes (or benefits) excluding significant unusual or infrequently occurring items. Discontinued operations and cumulative effects of changes in accounting principles are also excluded from this term. The term is not used in the income tax context of ordinary income versus capital gain. The meaning of unusual or infrequently occurring items is consistent with their use in the definitions of the terms unusual nature and infrequency of occurrence.") be computed at an estimated annual effective tax rate and the tax (or benefit) related to all other items be individually computed and recognized when the items occur (for example, the tax effects resulting from an employee share-based payment award within the scope of Topic 718 when the deduction for the award for tax purposes does not equal the cumulative compensation costs of the award recognized for financial reporting purposes). ##### [270-740-30-5](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:cacf113c4d47210574d278bb9af3ef34065330ddfb821536a072baf201c51941 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The estimated annual effective tax rate, described in paragraphs [740-270-30-6 through 30-8](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-6) , shall be applied to the year-to-date ordinary income (or loss) at the end of each interim period to compute the year-to-date tax (or benefit) applicable to ordinary income (or loss). ##### [270-740-30-6](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:c4ae0aa176d717a68751e1a9df86143b282126e840eecbef5100c0735575c091 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. At the end of each interim period the entity shall make its best estimate of the effective tax rate expected to be applicable for the full fiscal year. In some cases, the estimated annual effective tax rate will be the statutory rate modified as may be appropriate in particular circumstances. In other cases, the rate will be the entity's estimate of the tax (or benefit) that will be provided for the fiscal year, stated as a percentage of its estimated ordinary income (or loss) for the fiscal year (see paragraphs [740-270-30-30 through 30-34](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-30) if an ordinary loss is anticipated for the fiscal year). ##### [270-740-30-7](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:140f3d85fe14f8e7d4243835313bfd7baa30ee3bc7b4c1f6915f65a07af5fbbc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The tax effect of a [valuation allowance](https://asc.understandingaccounting.org/glossary/v/#valuation-allowance "The portion of a deferred tax asset for which it is more likely than not that a tax benefit will not be realized.") expected to be necessary for a [deferred tax asset](https://asc.understandingaccounting.org/glossary/d/#deferred-tax-asset "The deferred tax consequences attributable to deductible temporary differences and carryforwards. A deferred tax asset is measured using the applicable enacted tax rate and provisions of the enacted tax law. A deferred tax asset is reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.") at the end of the year for originating deductible temporary differences and [carryforwards](https://asc.understandingaccounting.org/glossary/c/#carryforwards "Deductions or credits that cannot be utilized on the tax return during a year that may be carried forward to reduce taxable income or taxes payable in a future year. An operating loss carryforward is an excess of tax deductions over gross income in a year; a tax credit carryforward is the amount by which tax credits available for utilization exceed statutory limitations. Different tax jurisdictions have different rules about whether excess deductions or credits may be carried forward and the length of the carryforward period. The terms carryforward, operating loss carryforward, and tax credit carryforward refer to the amounts of those items, if any, reported in the tax return for the current year.") during the year shall be included in the effective tax rate. ##### [270-740-30-8](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:1a9e2097da505287e776cdf0229423bda5b808821f676e8d6460f6d2008819dd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The estimated effective tax rate also shall reflect anticipated investment tax credits, foreign tax rates, percentage depletion, capital gains rates, and other available tax planning alternatives. However, in arriving at this estimated effective tax rate, no effect shall be included for the tax related to an employee share-based payment award within the scope of Topic 718 when the deduction for the award for tax purposes does not equal the cumulative compensation costs of the award recognized for financial reporting purposes, significant unusual or infrequently occurring items that will be reported separately, or for items that will be reported net of their related tax effect in reports for the interim period or for the fiscal year. The rate so determined shall be used in providing for income taxes on a current year-to-date basis. ##### [270-740-30-9](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:d205fd74f37e6bf68725bad5cc962053bdf798f8519e3a65467bf6fecd9a20ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples 1 through 2 (see paragraphs [740-270-55-2 through 55-23](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-2) ) contain illustrations of the computation of estimated annual effective tax rates beginning in paragraphs [740-270-55-3](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-3); [740-270-55-12](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-12); and [740-270-55-19 through 55-20](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-19) . #### Exclusion of Items from Estimated Annual Effective Tax Rate ##### [270-740-30-10](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:d8d5b93a224afc07905b37a14f2c019d71b1b86141b2722eba7e570b5902b220 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance identifies items that are always excluded from the determination of the estimated annual effective tax rate. This guidance also specifies the alternatives for including or excluding certain investment tax credits in the estimated annual effective tax rate. ##### [270-740-30-11](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:38eb3822e5495fd78d434c3358c72afe62087ac95227263af5b54929ee623bd9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The effects of changes in judgment about beginning-of-year valuation allowances and effects of changes in tax laws or rates on deferred tax assets or liabilities and taxes payable or refundable for prior years (in the case of a retroactive change) shall be excluded from the estimated annual effective tax rate calculation. ##### [270-740-30-12](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:a6848aeb8d5f09245494a5c95d1e6c2a5ff6bec05b53eb49fa6b42e2d8f601cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Taxes related to an employee share-based payment award within the scope of Topic 718 when the deduction for the award for tax purposes does not equal the cumulative compensation costs of the award recognized for financial reporting purposes, significant unusual or infrequently occurring items that will be reported separately or items that will be reported net of their related tax effect shall be excluded from the estimated annual effective tax rate calculation. ##### [270-740-30-13](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:36b8b4ae9791fbf7ba960530185ac40cd67677f7fc03b0fefbcef854e9ddeb7c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As these items are excluded from the estimated annual effective tax rate, Section 740-270-25 requires that the related tax effect be recognized in the interim period in which they occur. See Example 3 (paragraph [740-270-55-24](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-24)) for illustrations of accounting for these items in the interim period which they occur. ##### [270-740-30-14](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:615b1cda0705b26d6b2a4e2109f412c0b4c46027376f99e4a9becbd1e098a20e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Certain investment tax credits may be excluded from the estimated annual effective tax rate. If an entity includes allowable investment tax credits as part of its provision for income taxes over the productive life of acquired property and not entirely in the year the property is placed in service, amortization of deferred investment tax credits need not be taken into account in estimating the annual effective tax rate; however, if the investment tax credits are taken into account in the estimated annual effective tax rate, the amount taken into account shall be the amount of amortization that is anticipated to be included in income in the current year (see paragraphs [740-10-25-46](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-46) and [740-10-45-28](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-28)). ##### [270-740-30-15](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:c865f82aa0cd4342a80d6c6fee74de42f95f9d94b31cfff3ea0c28723440d97f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Further, paragraphs [842-50-30-1](https://asc.understandingaccounting.org/asc/842/50/#842-50-30-1) and [842-50-35-3 through 35-4](https://asc.understandingaccounting.org/asc/842/50/#842-50-35-3) require that investment tax credits related to leases that are accounted for as [leveraged leases](https://asc.understandingaccounting.org/glossary/l/#leveraged-lease "From the perspective of a lessor, a lease that was classified as a leveraged lease in accordance with the leases guidance in effect before the effective date and for which the commencement date is before the effective date.") shall be deferred and accounted for as return on the net investment in the leveraged leases in the years in which the net investment is positive and explains that the use of the term _years_ is not intended to preclude application of the accounting described to shorter periods. If an entity accounts for investment tax credits related to leveraged leases in accordance with those paragraphs for interim periods, those investment tax credits shall not be taken into account in estimating the annual effective tax rate. #### Ability to Make Estimates ##### [270-740-30-16](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:158ee82ac325b638f5279419c5ac16c79bacf3fba51fd6d6fb1e35fff30de29d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses the consequences of an entity's inability to reliably estimate some or all of the information that is ordinarily required to determine the annual effective tax rate in interim financial information. ##### [270-740-30-17](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:33dddc7d99e02cf629073ff1b3e164e7063def4f69a922c609068e9863ba474e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-270-25-3](https://asc.understandingaccounting.org/asc/270/740/#270-740-25-3) requires that if an entity is unable to estimate a part of its ordinary income (or loss) or the related tax (or benefit) but is otherwise able to make a reliable estimate, the tax (or benefit) applicable to the item that cannot be estimated be reported in the interim period in which the item is reported. ##### [270-740-30-18](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:70e55b6b0391ac569984e71793c5d137ea5c1ffa78aa3087f742a75811619fa9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Estimates of the annual effective tax rate at the end of interim periods are, of necessity, based on evaluations of possible future events and transactions and may be subject to subsequent refinement or revision. If a reliable estimate cannot be made, the actual effective tax rate for the year to date may be the best estimate of the annual effective tax rate. ##### [270-740-30-19](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:619d209eeb86caa08ee3165ab41beb973a95c2128ed25a4d1c80d071361f70f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The effect of translating foreign currency financial statements may make it difficult to estimate an annual effective foreign currency tax rate in dollars. For example, in some cases depreciation is translated at historical exchange rates, whereas many transactions included in income are translated at current period average exchange rates. If depreciation is large in relation to earnings, a change in the estimated ordinary income that does not change the effective foreign currency tax rate can change the effective tax rate in the dollar financial statements. This result can occur with no change in exchange rates during the current year if there have been exchange rate changes in past years. If the entity is unable to estimate its annual effective tax rate in dollars or is otherwise unable to make a reliable estimate of its ordinary income (or loss) or of the related tax (or benefit) for the fiscal year in a jurisdiction, the tax (or benefit) applicable to ordinary income (or loss) in that jurisdiction shall be recognized in the interim period in which the ordinary income (or loss) is reported. #### Effect of Operating Losses ##### [270-740-30-20](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:88659b808ecc2004b560b74c8d4be2b581140f87e1e7facca0d2768bf1a01e78 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses changes to the general methodology to determine income tax expense (or benefit) in interim financial information as set forth in paragraph [740-270-30-5](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-5) when an entity has experienced or expects to experience operating losses. ##### [270-740-30-21](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:a2b2d105cebed797de778c6c1504ea3bc9241f1af8f590de79f6a97e2fd65474 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity may have experienced year-to-date ordinary income (or loss) at the end of any interim period. These year-to-date actual results of either ordinary income (or loss) may differ from the results expected by the entity for either ordinary income (or loss) for the full fiscal year. This guidance identifies the required methodology for recording interim period income taxes for each of the four possible relationships of year-to-date ordinary income (or loss) and expected full fiscal year ordinary income (or loss).See Examples 1 through 2 (paragraphs [740-270-55-2 through 55-23](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-2) ) for example computations in these different situations. This guidance also establishes income tax benefit limitations when ordinary losses exist. ##### [270-740-30-22](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-22) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:439ece6de46eb008be7abdc6bcd3ff3906c064dded51bd6ae30559834ca4f0d2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity has ordinary income for the year to date at the end of an interim period and anticipates ordinary income for the fiscal year, the interim period tax shall be computed in accordance with paragraph [740-270-30-5](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-5). ##### [270-740-30-23](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-23) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:1ff387632ae49c22b8be3729927c0a416be58b1383211affba19fdb2b253cc8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1, Cases A and B1 (paragraphs [740-270-55-4 through 55-6](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-4) ) for illustrations of the application of these requirements. ##### [270-740-30-24](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-24) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:f68709f589209978a006199d2b41ca7d4bae55c62982dea0d8d2e90b6210dfe1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity has an ordinary loss for the year to date at the end of an interim period and anticipates ordinary income for the fiscal year, the interim period tax benefit shall be computed in accordance with paragraph [740-270-30-5](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-5), except that the year-to-date tax benefit recognized shall be limited to the amount determined in accordance with paragraphs [740-270-30-30 through 30-33](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-30) . ##### [270-740-30-25](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-25) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:4b4d1b8940836b2c855611e5414a67cbb4cc227fe995d105fb9c6fa8dcb02b1e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1, Cases B2 and B3 (paragraphs [740-270-55-7 through 55-8](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-7) ) for illustrations of the application of these requirements. ##### [270-740-30-26](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-26) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:8e4ed29095b5f87ab2cfdb96a2658ed19593793747344fb9b76da4a224a2b5b8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity has ordinary income for the year to date at the end of an interim period and anticipates an ordinary loss for the fiscal year, the interim period tax shall be computed in accordance with paragraph [740-270-30-5](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-5). The estimated tax benefit for the fiscal year, used to determine the estimated annual effective tax rate described in paragraphs [740-270-30-6 through 30-8](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-6) , shall not exceed the tax benefit determined in accordance with paragraphs [740-270-30-30 through 30-33](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-30) . ##### [270-740-30-27](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-27) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:c758163c5627f578974285807da35c09ff2460d2822e7a16d6b3abe8b2a78600 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 2, Cases A2 and C2 (paragraphs [740-270-55-16](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-16) and [740-270-55-20](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-20)) for illustrations of the application of these requirements. ##### [270-740-30-28](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-28) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:09bed0acfaf4b5e845eb57de8b0af75cc23acc00b124aa82fead1e3e9839f5f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity has an ordinary loss for the year to date at the end of an interim period and anticipates an ordinary loss for the fiscal year, the interim period tax benefit shall be computed in accordance with paragraph [740-270-30-5](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-5). The estimated tax benefit for the fiscal year, used to determine the estimated annual effective tax rate described in paragraphs [740-270-30-6 through 30-8](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-6) , shall not exceed the tax benefit determined in accordance with paragraphs [740-270-30-30 through 30-33](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-30) . ##### [270-740-30-29](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-29) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:0c843c3d0b778a21f9af2c10c3752f1a184e7ec3989f5e4c18c7c4d556154635 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 2, Cases A1, B, and C1 (paragraphs [740-270-55-15](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-15), [740-270-55-17](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-17), and [740-270-55-19](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-19)) for illustrations of the application of these requirements. #### Determining Income Tax Benefit Limitations ##### [270-740-30-30](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-30) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:d54bb1812a4ef5c0a1e7d4a9c8c9724f688d044e12855c5352961738170b4490 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-270-25-9](https://asc.understandingaccounting.org/asc/270/740/#270-740-25-9) provides that a tax benefit shall be recognized for a loss that arises early in a fiscal year if the tax benefits are expected to be either of the following: 1. a Realized during the year 2. b Recognizable as a deferred tax asset at the end of the year in accordance with the requirements established in Subtopic 740-10. Paragraph [740-10-30-5(e)](https://asc.understandingaccounting.org/asc/740/10/#740-10-30-5) requires that a valuation allowance be recognized if it is more likely than not that the tax benefit of some portion or all of a deferred tax asset will not be realized. ##### [270-740-30-31](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-31) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:035bcc8005f8f3d7b64090d39bc6c53d47677502ce1d27dc92a0c37fee6a483b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The limitations described in the preceding paragraph shall be applied in determining the estimated tax benefit of an ordinary loss for the fiscal year, used to determine the estimated annual effective tax rate and the year-to-date tax benefit of a loss. ##### [270-740-30-32](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-32) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:e3a8f181649fa0527a23e01439b75f83c64a44c03f7d3a4c4c72b2f0c2c15593 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The reversal of existing taxable temporary differences may be a source of evidence in determining whether a tax benefit requires limitation. A [deferred tax liability](https://asc.understandingaccounting.org/glossary/d/#deferred-tax-liability "The deferred tax consequences attributable to taxable temporary differences. A deferred tax liability is measured using the applicable enacted tax rate and provisions of the enacted tax law.") related to existing taxable temporary differences is a source of evidence for recognition of a tax benefit when all of the following conditions exist: 1. a An entity anticipates an ordinary loss for the fiscal year or has a year-to-date ordinary loss in excess of the anticipated ordinary loss for the fiscal year. 2. b The tax benefit of that loss is not expected to be realized during the year. 3. c Recognition of a deferred tax asset for that loss at the end of the fiscal year is expected to depend on [taxable income](https://asc.understandingaccounting.org/glossary/t/#taxable-income "The excess of taxable revenues over tax deductible expenses and exemptions for the year as defined by the governmental taxing authority.") from the reversal of existing taxable temporary differences (that is, a higher deferred tax asset valuation allowance would be necessary absent the existing taxable temporary differences). The requirement to consider the reversal of existing taxable temporary differences is illustrated in Example 2, Case D (see paragraph [740-270-55-21](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-21)). ##### [270-740-30-33](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-33) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:89bdfd46893b0fd1f506eb7e897e93a33fbbfe3ba5b869fb8280fc4300acb8f3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If the tax benefit relates to an estimated ordinary loss for the fiscal year, it shall be considered in determining the estimated annual effective tax rate described in paragraphs [740-270-30-6 through 30-8](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-6) . If the tax benefit relates to a year-to-date ordinary loss, it shall be considered in computing the maximum tax benefit that shall be recognized for the year to date. ##### [270-740-30-34](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-34) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:ec9e1f6f18c90191e36b76a9b1cf4e36ea05008c1e8e670930cbdccf6b78f414 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 2, Cases A1 and A2; B; and C1 and C2 (paragraphs [740-270-55-15 through 55-17](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-15) and [740-270-55-19 through 55-20](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-19) ) for illustrations of computations involving operating losses, and Example 1, Cases B2 and B3 (see paragraphs [740-270-55-7 through 55-8](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-7) ) for illustrations of special year-to-date limitation computations. #### Multiple Tax Jurisdictions ##### [270-740-30-35](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-35) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:c1a4dc0be118426c928a236e962c22871c79bc967b53425c4521189c05eb69c0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses possible changes to the general interim period income tax expense methodology when an entity is subject to tax in multiple jurisdictions. ##### [270-740-30-36](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-36) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:164827f68e64bd648fdcdc158a7457fcc82d37178b8f324ea6aa97296779fdfb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If an entity that is subject to tax in multiple jurisdictions pays taxes based on identified income in one or more individual jurisdictions, interim period tax (or benefit) related to consolidated ordinary income (or loss) for the year to date shall be computed in accordance with the requirements of this Subtopic using one overall estimated annual effective tax rate with the following exceptions: 1. a If in a separate jurisdiction an entity anticipates an ordinary loss for the fiscal year or has an ordinary loss for the year to date for which, in accordance with paragraphs [740-270-30-30 through 30-33](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-30) , no tax benefit can be recognized, the entity shall exclude ordinary income (or loss) in that jurisdiction and the related tax (or benefit) from the overall computations of the estimated annual effective tax rate and interim period tax (or benefit). A separate estimated annual effective tax rate shall be computed for that jurisdiction and applied to ordinary income (or loss) in that jurisdiction in accordance with the methodology otherwise required by this Subtopic. 2. b If an entity is unable to estimate an annual effective tax rate in a foreign jurisdiction in dollars or is otherwise unable to make a reliable estimate of its ordinary income (or loss) or of the related tax (or benefit) for the fiscal year in a jurisdiction, the entity shall exclude ordinary income (or loss) in that jurisdiction and the related tax (or benefit) from the overall computations of the estimated annual effective tax rate and interim period tax (or benefit). The tax (or benefit) related to ordinary income (or loss) in that jurisdiction shall be recognized in the interim period in which the ordinary income (or loss) is reported. The tax (or benefit) related to ordinary income (or loss) in a jurisdiction may not be limited to tax (or benefit) in that jurisdiction. It might also include tax (or benefit) in another jurisdiction that results from providing taxes on unremitted earnings, foreign tax credits, and so forth. See Example 5, Cases A; B; and C (paragraphs [740-270-55-39 through 55-43](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-39) ) for illustrations of accounting for income taxes applicable to ordinary income if an entity is subject to tax in multiple jurisdictions. #### Accounting for Income Taxes Applicable to the Cumulative Effect of a Change in Accounting Principle ##### [270-740-30-37](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-37) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:21091b119c2f65f34e5639b31b23f399d05472f7cfeab7da19aac95e90249d31 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Topic 250 establishes the accounting requirements related to recording the effect of a change in accounting principle. The guidance in this Subtopic addresses issues related to the measurement of the tax effect in interim periods associated with those changes. ##### [270-740-30-38](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-38) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:8ea0d13815b1ba0d36d1189c0692bdb8e6783401aad7c113fe7c34228132da76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The tax (or benefit) applicable to the cumulative effect of the change on retained earnings at the beginning of the fiscal year shall be computed the same as for the annual financial statements. ##### [270-740-30-39](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-39) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:34.642Z to 2026-09-09T23:20:34.642Z Record version: sha256:1c529f4cca21a714a6616fe267d4839aa7be1ba84c6680cce74c9256ea988777 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When an entity makes an accounting change in other than the first interim period of the entity's fiscal year, paragraph [250-10-45-14](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-14), requires that financial information for the prechange interim periods of the fiscal year shall be reported by retrospectively applying the newly adopted accounting principle to those prechange interim periods. The tax (or benefit) applicable to those prechange interim periods shall be recomputed. The revised tax (or benefit) shall reflect the year-to-date amounts and annual estimates originally used for the prechange interim periods, modified only for the effect of the change in accounting principle on those year-to-date and estimated annual amounts.