Open AccessThe Excess Tax Depreciation Component Of Deferred Taxes: Assumptions Versus Evidence
Author(s) -
Caroline Kern Craig
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v8i3.6149
Subject(s) - depreciation (economics) , economics , deferred tax , sample (material) , tax deferral , monetary economics , econometrics , accounting , actuarial science , public economics , tax reform , microeconomics , state income tax , gross income , profit (economics) , chemistry , chromatography , financial capital , capital formation
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.