# ASC 270-740-35: Interim Reporting — Income Taxes — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/270/740/#35-subsequent-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): 2026-09-09T23:20:37.242Z to 2026-09-09T23:20:37.242Z Record version: sha256:024ceefa0e6e88008d1004a6f82b118c5ba705f9fb76afe8d740b82a73ced628 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 270-740-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/270/740/#35-subsequent-measurement) SEC content: no ##### [270-740-35-1](https://asc.understandingaccounting.org/asc/270/740/#270-740-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:37.242Z to 2026-09-09T23:20:37.242Z Record version: sha256:3ee687a1b0dc4e7ec44595b1a62c575448c5e6e8cc1817764504141d24e2ff97 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This guidance addresses the accounting for interim period [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 periods subsequent to an entity's first interim period within a fiscal year. See Section 740-270-30 for a description of and requirements related to the determination of the estimated annual effective tax rate. ##### [270-740-35-2](https://asc.understandingaccounting.org/asc/270/740/#270-740-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:37.242Z to 2026-09-09T23:20:37.242Z Record version: sha256:771e5411fbd99c7826d58f4e780e00c7ed85edcb81a1de285e9692aba76a7d53 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The estimated annual effective tax rate is described in paragraphs [740-270-30-6 through 30-8](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-6) . As indicated in paragraph [740-270-30-18](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-18), 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. ##### [270-740-35-3](https://asc.understandingaccounting.org/asc/270/740/#270-740-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:37.242Z to 2026-09-09T23:20:37.242Z Record version: sha256:2389069669ce4a083f849960db38b065604872f95db6dab9f49d15b83bf9e58a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [740-270-30-6](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-6), at the end of each successive interim period the entity shall make its best estimate of the effective tax rate expected to be applicable for the full fiscal year. As indicated in paragraph [740-270-30-8](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-8), the rate so determined shall be used in providing 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.") on a current year-to-date basis. The rate shall be revised, if necessary, as of the end of each successive interim period during the fiscal year to the entity's best current estimate of its annual effective tax rate. ##### [270-740-35-4](https://asc.understandingaccounting.org/asc/270/740/#270-740-35-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:37.242Z to 2026-09-09T23:20:37.242Z Record version: sha256:1d680863c76964423f136b6a9b73f63692c10d35ff317c5c752127e32263dff4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [740-270-30-5](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-5), the estimated annual effective tax rate shall be applied to the year-to-date [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.") at the end of each interim period to compute the year-to-date [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.") applicable to ordinary income (or loss). The interim period tax (or benefit) related to ordinary income (or loss) shall be the difference between the amount so computed and the amounts reported for previous interim periods of the fiscal year. ##### [270-740-35-5](https://asc.understandingaccounting.org/asc/270/740/#270-740-35-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:37.242Z to 2026-09-09T23:20:37.242Z Record version: sha256:e9fed81237aad430184d09c7a8926264291b664260ec36d807939571b5116555 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. One result of the year-to-date computation is that, if the tax benefit of an ordinary loss that occurs in the early portions of the fiscal year is not recognized because it is more likely than not that the tax benefit will not be realized, tax is not provided for subsequent ordinary income until the [unrecognized tax benefit](https://asc.understandingaccounting.org/glossary/u/#unrecognized-tax-benefit "The difference between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to Subtopic 740-10.") of the earlier ordinary loss is offset (see paragraphs [740-270-25-9 through 25-11](https://asc.understandingaccounting.org/asc/270/740/#270-740-25-9) ). As indicated in paragraph [740-270-30-31](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-31), the limitations described in paragraph [740-270-25-9](https://asc.understandingaccounting.org/asc/270/740/#270-740-25-9) 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. As indicated in paragraph [740-270-30-33](https://asc.understandingaccounting.org/asc/270/740/#270-740-30-33), 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. ##### [270-740-35-6](https://asc.understandingaccounting.org/asc/270/740/#270-740-35-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:37.242Z to 2026-09-09T23:20:37.242Z Record version: sha256:46c412ea9a439b7c51135ee3d44579c954551ff25c18b5ebeb59918e3e639e25 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A change in judgment that results in subsequent recognition, derecognition, or change in measurement of a [tax position](https://asc.understandingaccounting.org/glossary/t/#tax-position "A position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for interim or annual periods. A tax position can result in a permanent reduction of income taxes payable, a deferral of income taxes otherwise currently payable to future years, or a change in the expected realizability of deferred tax assets. The term tax position also encompasses, but is not limited to: A decision not to file a tax return An allocation or a shift of income between jurisdictions The characterization of income or a decision to exclude reporting taxable income in a tax return A decision to classify a transaction, entity, or other position in a tax return as tax exempt An entity's status, including its status as a pass-through entity or a tax-exempt not-for-profit entity.") taken in a prior interim period within the same fiscal year is an integral part of an annual period and, consequently, shall be reflected as such under the requirements of this Subtopic. This requirement differs from the requirement in paragraph [740-10-25-15](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-15) applicable to a change in judgment that results in subsequent recognition, derecognition, or a change in measurement of a tax position taken in a prior annual period, which requires that the change (including any related interest and penalties) be recognized as a discrete item in the period in which the change occurs. ##### [270-740-35-7](https://asc.understandingaccounting.org/asc/270/740/#270-740-35-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:20:37.242Z to 2026-09-09T23:20:37.242Z Record version: sha256:84c1ea43d4e987b6190565d18119b4397e0fd1d92b8a8cc66172566643cf9505 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1, Case C (paragraph [740-270-55-9](https://asc.understandingaccounting.org/asc/270/740/#270-740-55-9)) for an illustration of how changes in estimates impact quarterly income tax computations.