scholarly journals An Empirical Formula to Calculate Deferred Taxes in Balance Sheet Consolidation

2014 ◽  
Author(s):  
Peng Zhao ◽  
Ying Ru
Keyword(s):  
Empirical Formula ◽  
Balance Sheet ◽  
Deferred Taxes

Unrecognized Deferred Taxes: Evidence from the U.K.

2004 ◽  
Vol 79 (1) ◽  
pp. 97-124 ◽  
Author(s):  
Elizabeth A. Gordon ◽  
Peter R. Joos
Keyword(s):  
Predictive Power ◽  
Balance Sheet ◽  
Deferred Taxes ◽  
Deferred Tax

We examine whether U.K. managers use the flexibility provided under the partial method for deferred taxes to measure unrecognized deferred taxes opportunistically. We first test whether firm-specific operational and opportunistic factors are associated with the level of unrecognized deferred taxes. The tests provide evidence certain U.K. managers opportunistically measure deferred taxes to manage leverage, consistent with arguments by commentators that deferred taxes heavily influence leverage indicators that play a prominent role in the U.K. contracting framework. Because the proper identification and measurement of both operational and opportunistic determinants of unrecognized deferred taxes influence our tests, we additionally investigate whether unrecognized taxes relate to future deferred tax reversals and future operating profitability of the firm. These tests show the components of deferred taxes predict both future deferred tax reversals and indicators of future profitability of the firm as predicted. Taken together, our results indicate that, on average, the existence of balance sheet management does not nullify the predictive power of (unrecognized) deferred taxes for future deferred tax reversals and for profitability measures. One implication of the results is that the recent U.K. standard change eliminating the partial provision method for deferred taxes potentially has reduced the usefulness of deferred tax disclosures.

scholarly journals Deferred Tax Accounting Concepts and Their Bond to the Accounting Ideologies

2021 ◽  
Vol 8 (4) ◽  
pp. 34-50
Author(s):  
A. A. Aksent’ev
Keyword(s):  
Balance Sheet ◽  
Financial Accounting ◽  
Corporate Management ◽  
Controversial Issues ◽  
Deferred Taxes ◽  
Accounting Standard ◽  
Domestic Practice ◽  
Important Object ◽  
Deferred Tax ◽  
Tax Accounting

Deferred taxes are an important object of accounting observation to judge the degree of discrepancies between financial and tax accounting. Meanwhile, the information discloses to users the effects arising from the tax planning tools usage for corporate management and forecasting cash outflows associated with the payment of income tax in the future. The paper formalized two concepts of accounting for deferred taxes in the form of models: temporary and timing differences associated with accounting ideologies. The author ha structured the logic of reflecting deferred taxes on accounting accounts using the balance sheet and “cost” methods. Analysis of foreign experience and domestic practice made it possible to conclude that there are controversial issues on the assessment of deferred taxes in reporting, including at present value. Also, the author revealed discrepancies in Russian Accounting Standard (PBU) 18/02 which were conceptually different from a similar international standard and conflicting with it in a number of theoretical and methodological positions. The research results are aimed at scientific and practical workers in the field of financial accounting, taxation and audit.

Balance sheet classification and the valuation of deferred taxes

2016 ◽  
Vol 28 (2) ◽  
pp. 77-85 ◽  
Author(s):  
Mark P. Bauman ◽  
Kenneth W. Shaw
Keyword(s):  
Balance Sheet ◽  
Deferred Taxes

Russian Accounting Standard (PBU) 18/02: A new approach to accounting for deferred taxes in the recognition of fixed asset transactions

2020 ◽  
Vol 23 (3) ◽  
pp. 244-261
Author(s):  
I.A. Lisovskaya ◽  
N.G. Trapeznikova
Keyword(s):  
Systems Analysis ◽  
Balance Sheet ◽  
Methodological Issues ◽  
Fixed Asset ◽  
Deferred Taxes ◽  
Accounting Standard ◽  
New Approach ◽  
Study Results ◽  
Fixed Assets ◽  
And Training

Subject. January 1, 2020, there came into effect a new edition of Russian Accounting Standard (PBU) 18/02, Accounting for Deferred Taxes on Corporate Income, which introduced the balance sheet approach to assessing deferred taxes. Therefore, the Russian accountants have to revise the way they have been applying PBU 18/02, and adjust the previous deferred taxes respectively. Objectives. We analyze methodological issues of accruing deferred taxes in relation to accounting for fixed assets when recognizing, measuring, remeasuring and constructing contingent liabilities for repair and others, which were introduced by PBU 18/02 as transactions resulting in timing differences. Methods. The study employs the systems analysis and logic generalization of legislative and regulatory documents and special literature on the issues under study. Results. Illustrating fixed asset transactions, we find that it is necessary to master the balance sheet method of accruing deferred taxes, including the coming changes in some provisions of PBU 6/01, Accounting for Fixed Assets. Conclusions and Relevance. Poor knowledge of the balance sheet complicates, inter alia, the use of the balance sheet method to accrue deferred taxes. Thus, it is reasonable to make methodological recommendations on the use of the balance sheet method to assess deferred taxes in line with the coming amendments to the existing standards and expedite mastering IFRS. The findings are designated for research, practice and training of accountants and auditors, and make suggestions on the improvement of the national accounting methodology, which would pursue the convergence of the modern international practices.

scholarly journals Deferred Tax Accounting for SMEs: Modified Income Statement Approach

2020 ◽  
Vol 3 (1) ◽  
pp. 31-47
Author(s):  
CA. (Dr.) Anand J Banka
Keyword(s):  
Balance Sheet ◽  
The Other ◽  
Unique Contribution ◽  
Deferred Taxes ◽  
Comprehensive Income ◽  
Income Statement ◽  
Other Comprehensive Income ◽  
Deferred Tax ◽  
Temporary Difference ◽  
Tax Accounting

Purpose: Accounting for income tax under International Financial Reporting Standards (‘IFRS’) is dealt with in IAS 12 Income Taxes. It is often said that users of financial statements do not find information produced in accordance with IAS 12 useful. This is a serious problem because for many businesses tax is one of the largest expenses. In some cases, preparers find the requirements of IAS 12 difficult to apply in practice. Its requirements are said to be unclear, and preparers sometimes question the relevance and understandability of the information that is provided in accordance with the standard. The IFRS for SMEs currently require use of balance sheet approach for accounting of deferred taxes. In India, the Institute of Chartered Accountants of India (ICAI) – the apex standard-setting body in India, is formulating revised accounting standards for SME’s in India. This article examines an alternative to the balance sheet approach which is less complicated and easy to implement.[Reviewer1] [AB2] Methodology: This article proposes a new method i.e. Modified Income Statement Approach. This method is a mix of income statement approach and balance sheet approach, as it requires recognition of deferred taxes using temporary difference approach but calculated using income statement and the other comprehensive income (in effect, Comprehensive income statement). Modified Income Statement Approach requires comparison of tax expense with the underlying related income and expenses so that they are recognized in the same period. In doing so, it also considers income and expenses recognized in the income statement as well as the Other Comprehensive Income. Hence, this approach is more of temporary difference approach but applied by using income statement method. It covers all items of timing differences and most items of temporary differences. The SMEs have less complicated structures and transactions. Also, in many countries, including India, there exists no concept of tax balance sheet. Hence, it would be worthwhile to ease-out the deferred tax accounting for SMEs. The hypothesis is that application of modified income statement approach can result in similar outcome as the balance sheet approach.Findings: A survey of 50 top companies in India was conducted. The results show that 60% of the companies would have recognized the same deferred tax asset/ liability under both the methods i.e. modified income statement approach and balance sheet approach. Balance 40% had some minor differences, but such transactions may be less frequent for SME. On an average, the impact of using modified income approach as against balance sheet approach is a mere 4%. The only items not covered by the modified income statement approach as against the balance sheet approach are Fair valuation of assets/ liabilities on business combination, Compound financial instrument and the existence of undistributed profits of subsidiaries, branches, associates and joint arrangements[Reviewer3] .[AB4] Unique contribution to theory, practice and policy: [Reviewer5] [AB6] To balance out the cost and benefits of implementing an accounting standard as per the framework, it is critical that SME’s use a simpler and less complicated method which is easy to understand and implement. Modified income statement approach is easy to apply and not complicated or technical to understand. In India, companies are used to calculating deferred tax using income statement approach. Hence, this will be a small change from the existing approach, while achieving the objectives of the balance sheet approach. Hence, modified income statement approach seems to be an appropriate method for SMEs.

scholarly journals The Excess Tax Depreciation Component Of Deferred Taxes: Assumptions Versus Evidence

2011 ◽  
Vol 8 (3) ◽  
pp. 92
Author(s):  
Caroline Kern Craig
Keyword(s):  
Information Content ◽  
Balance Sheet ◽  
Detailed Examination ◽  
Deferred Taxes ◽  
Substantial Impact ◽  
Deferred Tax ◽  
Proper Balance ◽  
Tax Depreciation

Several recent studies have examined the behavior of deferred taxes in an attempt to determine their proper balance sheet classification and likely information content. A key assumption underlying these studies, and most previous studies in the area, is that deferred taxes results principally from depreciation timing differences. This article, which is based on a detailed examination of Form 10-K reports for 122 sample companies over 15 years, demonstrates that this assumption is not currently valid. Results indicate that timing differences other than depreciation have a substantial impact on deferred tax behavior.

ANALISIS LAPORAN KEUANGAN UNTUK MENILAI KINERJA KEUANGAN PT. ASTRA AGRO LESTARI Tbk

2019 ◽  
Vol 5 (2) ◽  
pp. 75-88
Author(s):  
M. Shobihin ◽  
Sayekti Suindyah Dwiningwarni ◽  
Supriadi Supriadi
Keyword(s):  
Financial Performance ◽  
Good Condition ◽  
Balance Sheet ◽  
Financial Statements ◽  
Ratio Analysis ◽  
Business Decisions ◽  
Financial Ratio ◽  
Financial Ratio Analysis ◽  
Income Statement ◽  
Quantitative Descriptive

The financial statements serve as a benchmark in assessing the financial performance of the company as the basis for making business decisions. The motivation in conducting this research is to support previous research to see the development condition of one of the oil palm plantation companies. The purpose of this study is to assess the financial performance by using financial ratio analysis and horizontal analysis. The method used in this research is Quantitative Descriptive with analysis design using Term series Analysis. The result of the research based on financial ratio analysis shows the liquidity ratio and solvency ratio in good condition, while the activity ratio and profitability ratio are not good because it is below the industry average of similar companies. Based on horizontal analysis, financial performance fluctuated and influenced internal and external factors such as operational performance and the average price of world palm oil. The limitations of this study are using only two analytical tools and financial statements analyzed only the balance sheet and income statement.

Asset Inspection Management System as a Reliable Inspection/ Monitoring Tool

2020 ◽  
Vol 78 (12) ◽  
pp. 1276-1285
Author(s):  
Shibu John A
Keyword(s):  
Asset Management ◽  
Management System ◽  
Balance Sheet ◽  
Integrity Assessment ◽  
Material Evaluation ◽  
The People ◽  
Physical Assets ◽  
Asset Management System ◽  
On Time Delivery ◽  
Capital Intensive

Enterprise asset management (EAM) systems are used by asset owners and/or operators to manage the maintenance of their physical assets. These assets, including equipment, facilities, vehicles, and infrastructure, need maintenance to sustain their operations. An EAM system provides the means to have less unplanned downtime and extended asset longevity, which offers clear business benefits that improve the profit and loss statement and balance sheet. Particularly for capital-intensive industries, like drilling and exploration, the failure of on-time delivery of critical equipment or processes is disruptive and costs nonproductive time and customer satisfaction. Organizations understand these issues and employ an appropriate asset management system to engineer their asset maintenance and management. An EAM system is needed to manage the people, assets/equipment, and processes. EAMs are used to plan, optimize, execute, and track the needed maintenance activities with associated priorities, skills, materials, tools, and information. Similarly, nondestructive testing (NDT) is used as a tool for integrity assessment of assets in drilling and exploration. The main advantage of using NDT is that the item’s intended use or serviceability is not affected. The selection of a specific technique should be based on knowledge and skills that include design, material processing, and material evaluation. Validating the purpose of this paper, we emphasize the importance of optimizing the asset utilization and serviceability to enhance overall efficiency by integrating EAM software that manages assets, the operation management system (OMS) controlling the processes, and asset inspection management systems (AIMSs).

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