Consistent with prior studies, this paper shows that future tax assets are positively associated with share prices, suggesting that they are valued as assets. Future tax liabilities are negatively associated with share prices, suggesting that they are valued as liabilities. Future tax value allowance, which is created for future tax assets, is negatively associated with share prices. This study also explores the value relevant information of future tax asset and liability categories.
In addition, this paper explores what determines the valuation of future tax assets and liabilities. It is argued that future tax assets are more less valuable if no sufficient future income will be generated in the near future to utilize these tax assets; future tax liabilities will reduce share prices more less , if there is a higher lower likelihood of reversal in the short run.
The results support this argument. It is shown that 1 future tax assets are less valuable if the firm's value allowance is higher i. Zeng, T. Report bugs here. Please share your general feedback. You can join in the discussion by joining the community or logging in here. Earlier application continues to be permitted. This Section establishes standards for the recognition, measurement, presentation and disclosure of income and refundable taxes in an enterprise's financial statements.
Private companies are provided with a choice to account for their income taxes using either the taxes payable method or the future income taxes method. Under the taxes payable method, only current income tax assets and liabilities are recognized. Under the future income taxes method, differences between the carrying amount and tax base of assets and liabilities, and carryforward tax losses and credits, are recognized with limited exceptions, as future income tax liabilities and future income tax assets.
Future income tax assets are subject to a "more likely than not" test of recoverability. Effective for fiscal years beginning on or after January 1, Amendments to Section i to remove an outdated example and ii to require non-current classification of future income tax assets and income tax liabilities rather than require current and non-current classification of these assets and liabilities.
At its meeting on April 15, , as a result of the impact of the Covid 19 pandemic, the AcSB decided to defer the effective date of these amendments to Section by one year to fiscal years beginning on or after January 1, Note: The above summary does not include details of consequential amendments made as the result of other projects.
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