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Balance sheet classification and the valuation of deferred taxes

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  • Bauman, Mark P.
  • Shaw, Kenneth W.

Abstract

The Financial Accounting Standards Board recently issued Accounting Standards Update 2015–17, which will require firms to classify all deferred tax assets and liabilities as noncurrent in classified balance sheets instead of separating them into current and noncurrent amounts. This change is designed to simplify the reporting of deferred taxes and align with International Financial Reporting Standards. This study conducts empirical analyses on a broad cross-section of publicly traded U.S. firms in order to examine the stock market's valuation of current and noncurrent deferred tax assets and liabilities. The results suggest that classifying all deferred taxes as noncurrent may adversely affect the usefulness of financial statements for equity investors.

Suggested Citation

  • Bauman, Mark P. & Shaw, Kenneth W., 2016. "Balance sheet classification and the valuation of deferred taxes," Research in Accounting Regulation, Elsevier, vol. 28(2), pages 77-85.
    • Handle: RePEc:eee:reacre:v:28:y:2016:i:2:p:77-85
    DOI: 10.1016/j.racreg.2016.09.004
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    References listed on IDEAS

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    6. Bauman, Mark P. & Shaw, Kenneth W., 2016. "Harmonizing pension accounting: Income statement effects of applying IAS19R to U.S. firms," Research in Accounting Regulation, Elsevier, vol. 28(1), pages 1-10.
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    Cited by:

    1. Bauman, Mark P. & Shaw, Kenneth W., 2018. "Value relevance of customer-related intangible assets," Research in Accounting Regulation, Elsevier, vol. 30(2), pages 95-102.
    2. Moehrle, S. & Kozloski, T. & Meckfessel, M. & Reynolds-Moehrle, J. & Wen, H., 2018. "Developments in accounting regulation: A synthesis and annotated bibliography of evidence and commentary in the 2016 academic literature," Research in Accounting Regulation, Elsevier, vol. 30(1), pages 49-62.
    3. Martin Kedron, 2020. "Goodwill and Its Effect on Share Price of Manufacturing and Nonmanufacturing Companies," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 68(2), pages 373-381.

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