# ASC 740-10-45: Income Taxes — Overall — 45 Other Presentation Matters Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/740/10/#45-other-presentation-matters) 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): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:78a7d8d3f171c2a931caaafdd6be7e6cadd042d41de006031587a63260e74847 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 740-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/740/10/#45-other-presentation-matters) SEC content: no ##### [740-10-45-1](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:4070dd1c0af19d0a965dae4c16116e7a7cfcee00545067aac30cf418e5a12671 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section provides guidance on statement of financial position, income statement and statement of shareholder equity classification, and presentation matters applicable to all the following: 1. a Statement of financial position classification of income tax accounts 2. b Income statement presentation of certain measurement changes to income tax accounts 3. c Income statement classification of interest and penalties 4. d Presentation matters related to investment tax credits under the deferral method. 5. e Statement of shareholder equity reclassification of certain income tax effects from accumulated other comprehensive income. ##### [740-10-45-2](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:fedb1de50b0c3daf7dcb576ecfa5f4fe09045443e5a085613d151b68c7299aab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Subtopic 740-20 for guidance on the intraperiod allocation of total income tax expense (or benefit). #### Statement of Financial Position Classification of Income Tax Accounts ##### [740-10-45-3](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:185223eef542c94750463df8c9d362f7609de8f1a51cc4842668f7212eced054 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Topic 210 provides general guidance for classification of accounts in statements of financial position. The following guidance addresses classification matters applicable to income tax accounts and is incremental to the general guidance. ##### [740-10-45-4](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:0251b74ca920d0d5e8741fffddf013b4c711f88a9e4613247624e3b130d87a69 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In a classified statement of financial position, an entity shall classify deferred tax liabilities and assets as noncurrent amounts. ##### [740-10-45-5](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:b7e60fc7bc38fc84ba284fc366ee9b05a71bf65b05299e1a5903c1c46cb79ae9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-17](https://asc.understandingaccounting.org/updates/asu-2015-17/). ##### [740-10-45-6](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:3ca8704c31086459a2e2c1ed8f4c018a2b56c674c69c8d9b6f0b992966151390 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a particular tax-paying component of an entity and within a particular tax jurisdiction, all deferred tax liabilities and assets, as well as any related [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."), shall be offset and presented as a single noncurrent amount. However, an entity shall not offset deferred tax liabilities and assets attributable to different tax-paying components of the entity or to different tax jurisdictions. ##### [740-10-45-7](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-7) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:c0166785856544b374b68d7a44234a026536f4b65bf5f620873f25b6d822d191 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-17](https://asc.understandingaccounting.org/updates/asu-2015-17/). ##### [740-10-45-8](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-8) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:bf1704138d0ff2889b469145886d19a38bc2b73386b683819296715fd5d73f86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-17](https://asc.understandingaccounting.org/updates/asu-2015-17/). ##### [740-10-45-9](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-9) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:27d3da4950318d2357665deb231477a526f681379d4591fc258b05993437d29f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-17](https://asc.understandingaccounting.org/updates/asu-2015-17/). ##### [740-10-45-10](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-10) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:7701701f36fb493ffc0fffcb9870535cba5d31610f7f2571248389fdf173e978 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-17](https://asc.understandingaccounting.org/updates/asu-2015-17/). ##### [740-10-45-10A](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-10A) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:730c6ab86dc62d6faa84b244c1f8fece3aaf667b471fbb08727856ae2d5f6209 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Except as indicated in paragraphs [740-10-45-10B](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-10B) and [740-10-45-12](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-12), an [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."), or a portion of an unrecognized tax benefit, shall be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. ##### [740-10-45-10B](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-10B) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:ca7445fb7f04416aade46e0547b73f70acf4dc4324c5ddfc69149fce3935909a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit shall be presented in the financial statements as a liability and shall not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and shall be made presuming disallowance of the tax position at the reporting date. ##### [740-10-45-11](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-11) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:e7ef935d230763c9ca5f1c62f12e487dead8007ff12e4fb982b8d45f8c375da0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity that presents a classified statement of financial position shall classify an unrecognized tax benefit that is presented as a liability in accordance with paragraphs [740-10-45-10A through 45-10B](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-10A) as a current liability to the extent the entity anticipates payment (or receipt) of cash within one year or the operating cycle, if longer. ##### [740-10-45-12](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-12) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:3feed40aa80807e10ce773e084fd73080416ec568b0f63d6c4242810b08eed26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An unrecognized tax benefit presented as a liability shall not be classified as a deferred tax liability unless it arises from a [taxable temporary difference](https://asc.understandingaccounting.org/glossary/t/#taxable-temporary-difference "Temporary differences that result in taxable amounts in future years when the related asset is recovered or the related liability is settled. See Temporary Difference."). Paragraph [740-10-25-17](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-17) explains how the recognition and 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.") may affect the calculation of a temporary difference. ##### [740-10-45-13](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-13) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:a780f56361f2f3247c54debb59647902af683f4d6c7f546d35b8ab9d0a5cb06a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The offset of cash or other assets against the tax liability or other amounts owing to governmental bodies is not acceptable except as noted in paragraphs [210-20-45-6](https://asc.understandingaccounting.org/asc/210/20/#210-20-45-6) and [740-10-45-10A through 45-10B](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-10A) . #### Income Statement Presentation of Certain Measurement Changes to Income Tax Accounts ##### [740-10-45-14](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-14) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:9d6ac6464a508a074044e68f39a5c37b97b88a7238412261b2de00c82440f6fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following guidance addresses the presentation on the income statement of the effect of changes in deferred tax accounts caused by the following types of changes: 1. a Changes in tax laws or rates 2. b Changes in the tax status of an entity 3. c Changes that impact the valuation allowance for deferred tax assets 4. d Changes related to assets acquired outside of a business combination. ##### [740-10-45-15](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-15) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:be1087132aaf8f96b9e097000595bc2cd3dd22620ce5b7f7424b33f1775cc5b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When deferred tax accounts are adjusted as required by paragraph [740-10-35-4](https://asc.understandingaccounting.org/asc/740/10/#740-10-35-4) for the effect of a change in tax laws or rates, the effect shall be included in income from continuing operations for the period that includes the enactment date. ##### [740-10-45-16](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-16) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:d8d7feb8034d383fdeee0e0d1a865ae64f02285852e552d36c06252f15624536 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-10-25-48](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-48) provides the recognition guidance when a tax law retroactively changes tax rates. In such cases, the cumulative tax effect is included in income from continuing operations. ##### [740-10-45-17](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-17) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:87568ee7e0d1523257e070a6ff0092e2ef6cba0728ffbda222a2294648644df3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-10-30-26](https://asc.understandingaccounting.org/asc/740/10/#740-10-30-26) provides the measurement guidance for a change in tax rates on items not included in income from continuing operations that arose during the current fiscal year and prior to the date of enactment. In such cases, the tax effect of a retroactive change in enacted tax rates on current or deferred tax assets and liabilities related to those items is included in income from continuing operations in the period of enactment. ##### [740-10-45-18](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-18) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:b03f0f41b99d5ede4a5d6c807f896bd0798d21fcdba0a86bb0c33f1e420ed053 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-10-25-47](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-47) requires that the effect of a change in tax laws or rates be recognized at the date of enactment. Accordingly, if an entity were adopting a new accounting standard as of a date prior to the enactment date, the effect of the change in tax laws or rates would not be recognized in the cumulative effect of adopting the standard, but would be recognized in income from continuing operations for the period that includes the enactment date. This would be true regardless of whether the change was retroactive to the earlier date. ##### [740-10-45-19](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-19) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:f42cc5269c18dd9a730203c1b3572aacecad73b6b536637c3155a858c768fae0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When deferred tax accounts are recognized or derecognized as required by paragraphs [740-10-25-32](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-32) and [740-10-40-6](https://asc.understandingaccounting.org/asc/740/10/#740-10-40-6) due to a change in tax status, the effect of recognizing or derecognizing the deferred tax liability or asset shall be included in income from continuing operations. ##### [740-10-45-20](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-20) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:e0ef1a6687bd784b8faef94748a3fd430fa1bb1e684ade946ee54d3d6136de27 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The effect of a change in the beginning-of-the-year balance of a valuation allowance that results from a change in circumstances that causes a change in judgment about the realizability of the related [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.") in future years ordinarily shall be included in income from continuing operations. The only exceptions are changes to valuation allowances of certain tax benefits that are adjusted within the measurement period as required by paragraph [805-740-45-2](https://asc.understandingaccounting.org/asc/740/805/#740-805-45-2) related to business combinations and the initial recognition (that is, by elimination of the valuation allowances) of tax benefits related to the items specified in paragraph [740-20-45-11(c) through (f)](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-11). The effect of other changes in the balance of a valuation allowance are allocated among continuing operations and items other than continuing operations as required by paragraphs [740-20-45-2](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-2) and [740-20-45-8](https://asc.understandingaccounting.org/asc/740/20/#740-20-45-8). ##### [740-10-45-21](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-21) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:54c008f7d46e3a5f0ce785dc3b1f17705d56f5dc0106677270d38a7c692f7eb3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Changes in valuation allowances due to changed expectations about the realization of deferred tax assets caused by transactions among or with shareholders shall be included in the income statement. A write-off of a preexisting deferred tax asset that an entity can no longer realize as a result of a transaction among or with its shareholders shall similarly be charged to the income statement. The same net effect results from eliminating a deferred tax asset and increasing a valuation allowance to 100 percent of the amount of the related deferred tax asset. ##### [740-10-45-22](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-22) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:ed85a920c7d6aa73b94d4ae2fb7d980466a55ef1b940baeaf461ffcf55151246 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-10-25-51](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-51) addresses the accounting when an asset is acquired outside of a business combination and the tax basis of the asset differs from the amount paid and identifies related examples. In the [event](https://asc.understandingaccounting.org/glossary/e/#event "A happening of consequence to an entity. The term encompasses both transactions and other events affecting an entity.") that the accounting results in the recognition of a deferred tax asset and if, subsequent to the acquisition, it becomes more likely than not that some or all of the acquired deferred tax asset will not be realized, the effect of such adjustment shall be recognized in continuing operations as part of income tax expense. A proportionate share of any remaining unamortized deferred credit balance arising from the accounting required in that paragraph shall be recognized as an offset to income tax expense. The deferred credit shall not be classified as part of deferred tax liabilities or as an offset to deferred tax assets. ##### [740-10-45-23](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-23) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:e538ed785090576e7951457802985725a9996474aa21d85ec6deeda0d6548e0f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Income tax uncertainties that exist at the date of acquisition of the asset shall be accounted for in accordance with this Subtopic. ##### [740-10-45-24](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-24) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:630fa3d94e862e018f9ca283bd374d63104777bf5d173adc6bd21f0c24b26d51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [740-10-25-51](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-51), subsequent accounting for an acquired valuation allowance (for example, the subsequent recognition of an acquired deferred tax asset by elimination of a valuation allowance established at the date of acquisition of the asset) would be in accordance with paragraphs [805-740-25-3 through 25-4](https://asc.understandingaccounting.org/asc/740/805/#740-805-25-3) and [805-740-45-2](https://asc.understandingaccounting.org/asc/740/805/#740-805-45-2). #### Income Statement Classification of Interest and Penalties ##### [740-10-45-25](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-25) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:7df4228c6f69d1d8e65d1a7e7a7391b32e158027210be382d69a7955c2b114d0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Interest recognized in accordance with paragraph [740-10-25-56](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-56) may be classified in the financial statements as either [income taxes](https://asc.understandingaccounting.org/glossary/i/#income-taxes "Domestic and foreign federal (national), state, and local (including franchise) taxes based on income.") or interest expense, based on the accounting policy election of the entity. Penalties recognized in accordance with paragraph [740-10-25-57](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-57) may be classified in the financial statements as either income taxes or another expense classification, based on the accounting policy election of the entity. Those elections shall be consistently applied. #### Investment Tax Credits Under the Deferral Method ##### [740-10-45-26](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-26) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:8a6c0c6cecb48edad137faf4c0cafd4b7fe451b2215bd611c640c6e976ddc154 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [740-10-25-46](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-46) describes two acceptable methods for recognizing the benefit of investment tax credits. The following guidance addresses presentation matters related to one of those methods, the deferral method. ##### [740-10-45-27](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-27) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:ebcb344779a39f154d2c6a38a7351e47cfa68b324d030c4412bb58d029bf9341 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The reflection of the allowable credit as a reduction in the net amount at which the acquired property is stated (either directly or by inclusion in an offsetting account) may be preferable in many cases. However, it is equally appropriate to treat the credit as deferred income, provided it is amortized over the productive life of the acquired property. ##### [740-10-45-28](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-28) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:32ad43e0b93ff669c088398ea9d71b6967aea47dae0792e5805e348a46eb1701 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It is preferable that the statement of income in the year in which the allowable investment credit arises should be affected only by the results which flow from the accounting for the credit set forth in paragraph [740-10-25-46](https://asc.understandingaccounting.org/asc/740/10/#740-10-25-46). Nevertheless, reflection of income tax provisions, in the income statement, in the amount payable (that is, after deduction of the allowable investment credit) is appropriate provided that a corresponding charge is made to an appropriate cost or expense (for example, to the provision for depreciation) and the treatment is adequately disclosed in the financial statements of the first year of its adoption. #### Statement of Shareholder Equity Reclassification of Certain Income Tax Effects from Accumulated Other Comprehensive Income ##### [740-10-45-29](https://asc.understandingaccounting.org/asc/740/10/#740-10-45-29) Pending content: no Source downloaded (UTC): 2026-09-10T01:16:37.434Z to 2026-09-10T01:16:37.434Z Record version: sha256:285116225f6840553255587209c147e4e9521e4ea8a61ef51db23f36a149ad3e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [220-10-45-12A](https://asc.understandingaccounting.org/asc/220/10/#220-10-45-12A) provides guidance on the reclassification of certain income tax effects of items within accumulated other comprehensive income to retained earnings. That guidance results from H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (Tax Cuts and Jobs Act).