Balance sheet classification of deferred income taxes arising from installment sales

It has come to the attention of the Securities and Exchange Commission that diverse practices exist regarding the balance sheet classification of deferred income taxes arising from the use of the installment method of reporting gross profit for income tax purposes. The majority of companies having installment receivables classified as current assets classify the related deferred income taxes as a noncurrent credit item, while some classify the deferred income taxes as a current liability or as a deduction from the receivables. It is understood that, at the end of their current fiscal years, some registrants intend to change from current to noncurrent the classification of the deferred income taxes if other companies continue to classify the related deferred income taxes as a noncurrent item. The Commission\u27s staff has noted that some companies have recently changed their reporting practices to show such deferred income taxes as a noncurrent item while retaining the related installment receivables among current assets