Advanced Search
MyIDEAS: Login to save this paper or follow this series

Tax Accounting For Inflation And Devaluation: The Case Of Indonesia

Contents:

Author Info

  • Glenn Jenkins

    ()
    (Queen's University, Kingston, On, Canada)

Abstract

The adjustment required to correct “generally accepted accounting principles” for the impact of inflation or devaluation, has been the subject of a protracted debate in accounting and taxation literature. As an outcome of that discussion, it is now generally recognized that inflation affects the estimation of income and taxes using conventional accounting procedures in at least five different ways. First, depreciation expenses or capital cost allowances become underestimated because they are usually calculated as a fraction of the historical cost of fixed assets, not their current inflated values. Second, the cost of goods sold tend to be underestimated, and income over-estimated, if goods used from inventories are valued on a first in first out basis rather than at their current (adjusted for inflation) costs. Third, nominal interest rates tend to rise due to the compensation required by lenders for the decrease in the real value of the principal outstanding due to inflation. This tends to create a significant immediate increase in the cash outflow of the business relative to the increase in cash inflow due to inflation.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.queensjdiexec.org/publications/qed_dp_56.pdf
Download Restriction: no

Bibliographic Info

Paper provided by JDI Executive Programs in its series Development Discussion Papers with number 1981-09.

as in new window
Length: 18 pages
Date of creation: Jan 1981
Date of revision:
Handle: RePEc:qed:dpaper:56

Contact details of provider:
Postal: Kingston, Ontario, K7L 3N6
Phone: (613) 533-2250
Fax: (613) 533-6668
Email:
Web page: http://qed.econ.queensu.ca/
More information through EDIRC

Related research

Keywords: inflation; tax accounting; Indonesia;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:qed:dpaper:56. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bahman Kashi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.