Discussion of: “On the Aggregation and Valuation of Deferred Taxes”

Discussion of: “On the Aggregation and Valuation of Deferred Taxes” Review of Accounting Studies, 6, 299–304, 2001 C 2001 Kluwer Academic Publishers. Manufactured in The Netherlands. Discussion of: “On the Aggregation and Valuation of Deferred Taxes” RUSSELL J. LUNDHOLM lundholm@umich.edu University of Michigan Business School, School of Business Administration, 701 Tappan, D2260, Ann Arbor, MI 48109 Introduction The proper accounting for deferred taxes has long been a source of regulatory debate, and has produced a steady stream of accounting pronouncements. Perhaps because of the inherent difficulty of accounting for deferred taxes, financial statement analysis texts frequently propose adjustments to the recorded amounts (see, for example, Bernstein and Wild 1997, p. 126). The Amir, Kirschenheiter and Willard (AKW) paper offers a welcome dose of structured thinking in this area by providing a formal evaluation of deferred tax accounting. They add deferred taxes to the Feltham-Ohlson (1996) valuation framework and examine how different ways to account for taxes give rise to different valuation expressions. In this discussion I will summarize their main results, re-writing some of them in a way that highlights the simplicity of the resulting valuation expression. I also suggest some paths for future research. The Setup I assume the reader is familiar with the notation and basic relationships http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Accounting Studies Springer Journals

Discussion of: “On the Aggregation and Valuation of Deferred Taxes”

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Publisher
Springer Journals
Copyright
Copyright © 2001 by Kluwer Academic Publishers
Subject
Business and Management; Accounting/Auditing; Corporate Finance; Public Finance
ISSN
1380-6653
eISSN
1573-7136
D.O.I.
10.1023/A:1011671026981
Publisher site
See Article on Publisher Site

Abstract

Review of Accounting Studies, 6, 299–304, 2001 C 2001 Kluwer Academic Publishers. Manufactured in The Netherlands. Discussion of: “On the Aggregation and Valuation of Deferred Taxes” RUSSELL J. LUNDHOLM lundholm@umich.edu University of Michigan Business School, School of Business Administration, 701 Tappan, D2260, Ann Arbor, MI 48109 Introduction The proper accounting for deferred taxes has long been a source of regulatory debate, and has produced a steady stream of accounting pronouncements. Perhaps because of the inherent difficulty of accounting for deferred taxes, financial statement analysis texts frequently propose adjustments to the recorded amounts (see, for example, Bernstein and Wild 1997, p. 126). The Amir, Kirschenheiter and Willard (AKW) paper offers a welcome dose of structured thinking in this area by providing a formal evaluation of deferred tax accounting. They add deferred taxes to the Feltham-Ohlson (1996) valuation framework and examine how different ways to account for taxes give rise to different valuation expressions. In this discussion I will summarize their main results, re-writing some of them in a way that highlights the simplicity of the resulting valuation expression. I also suggest some paths for future research. The Setup I assume the reader is familiar with the notation and basic relationships

Journal

Review of Accounting StudiesSpringer Journals

Published: Oct 3, 2004

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