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 email@example.com 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
Review of Accounting Studies – Springer Journals
Published: Oct 3, 2004
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