Knowledge that Transforms

Value relevance, Accounting, Earnings announcements, Usefulness of Accounting

Depreciation, Ladelle's theory of depreciation, Capital Gains

Earnings, Simulation, Permanent Earnings, Cost accounting

Solvency, Financial ratios, Bankruptcy, Financial statements

Discounted Cashflow, Planning Horizon, Forecast horizon

Firms which elect to use accelerated depreciation for tax purposes while using straight-line for reporting purposes have only one approved method for recording the difference between book tax expense and the tax liability.' This method relies on a deferred credit account in which the difference between the tax expense (calculated using straight-line depreciation) and the actual tax paid is recorded. The reported net income resulting from this procedure is the same as it would have been if straight-line depreciation were taken for tax purposes. Tax allocation is considered an extension of accrual accounting to include` taxes. The logical grounds for such inclusion are laid in the classification of taxes as expense items.

Price-level costs, Historic costs, Questionnaire

Opportunity Costs, Linear Programming, Discounted revenue valuation