Abstract Presents news briefs related to accounting education as of October 1971. Retirement of E. Bryan Smyth from the University of New South Wales; List of accounting professors who joined the University of Florida; Appointment of Ralph J. Winston as a University Professor of Accounting at the Governors State University in Illinois.
Abstract The article presents information related to the department of accounting in various universities in the U.S. In the University of Arizona, Jim G. Ashburne of the University of Texas at Austin is a visiting professor for the Spring Semester 1971. Edwin A. Bump, who completed doctoral work at the University of Missouri, joined the faculty as an assistant professor in September 1970. Taylor W. Foster, who is completing doctoral work at Pennsylvania State University, will join the faculty as an Assistant Professor in September 1971. At the California State College at Fullerton, new faculty for the academic year 1970-71 include Robert W. Vanasse, professor of accounting, previously on the faculty of Ohio State University; Donald J. Barnett and John F. Williams, assistant professors. Robert A. Meier, Chairman, represented the Department at the Faculty Seminar in Palo Alto sponsored by the California Certified Public Accountants Foundation for Education & Research in August 1970. At the DePaul University, Helene Ramanauskas has taken a leave of absence to study quantitative methods at the University of Georgia.
Abstract The 1957 Statement of the American Accounting Association's Committee on Concepts and Standards Underlying Corporate Financial Statements' makes two specific recommendations regarding the treatment of corporate income taxes in financial statements. (1) With respect to income determination, it states that interest charges, income taxes and true profitsharings are not determinants of enterprise net income. (2) With respect to the differences between reported and taxable business earnings and the tax payment. Although these two recommendations may be independent of each other, the inter-period allocation of income taxes is often associated with the treatment of the tax as an expense. The purpose of this paper is twofold: (1) The first part presents some arguments in favor of including the income tax as a determinant of income in all meaningful concepts of the corporation. (2) The second part presents some arguments to substantiate the inter-period allocation of income taxes and presents an alternative approach which may make the allocation process more palatable to the Committee on Concepts and Standards.
Abstract The accounting for depreciation is important to the economist as well as to the accountant because of the possible effects of miscalculated depredation rates on national income and employment. Since it is necessary to use accounting data or statistics derived from accounting data in the study of the relationships of depreciation to national income and gross national product, it is important that there be complete understanding of the accounting and economic uses of the term "depreciation." Current accounting methods produce depreciation rates which are quite rigid over time because they are based on the cost of depreciable assets and the most widely used methods allocate these costs uniformly over time rather than according to use. It is quite often assumed that this rigidity produces excessive depreciation rates during periods of low activity and inadequate depreciation rates during periods of expanding or high activity. It is probable that these depreciation rates are excessive or inadequate in an economic sense more than in an accounting sense. This excess or inadequacy becomes important to national welfare if it has an unfavorable effect on the general level of business activity. An investigation of the consequences of excessive or inadequate depreciation rates must involve an investigation of direct or indirect effects on consumption and investment. It is claimed that during periods of low activity, excessive depreciation rates prevent the payment of dividends and thus curtail consumption. This would be true if it can be assumed that by decreasing depreciation rates, dividends would be increased. This does not seem likely since many corporations report no profit or a loss during depression periods. Furthermore, it is probable that dividends would not be increased during such periods because of a desire to increase safety margins and because of tighter credit markets and falling income. Rather, there is a tendency to maintain dividends because of a desire to enforce a rigid dividend policy irrespective of the business cycle. It is more probable that depreciation rates may have an effect on investment through profit expectations. That is, excessive depreciation rates during a period of contraction might cause greater pessimism as to profit expectations and inadequate depreciation rates during periods of expansion might lead to over-optimism. Thus, it would cause less investment when it is needed most and too much investment when inflation is already in process. This however, is not conclusive nor does it appear to be of a very large magnitude. This does seem to provide some argument in favor of depreciation methods which would provide for greater charges during high activity and smaller charges during low activity. The most practical method would seem to be that which bases the amount of depreciation or a part of it (the "user cost") on the amount of production. Proposed methods which would base the depreciation charge on replacement cost or purchasing power indexes would also further increase the economic significance of accounting depreciation.
Abstract The article focuses on a report of the Committee on Establishment of an Accounting Commission. The charge to this committee, as formulated by the American Accounting Association Executive Committee at its August 1970 meeting, is to consider the feasibility and desirability of establishing a Commission to study and recommend an organizational structure for advancing the formulation and modification of generally accepted accounting principles and the issuance of authoritative pronouncements concerning the application of such principles. If the committee recommends that such a Commission should be formed, the committee also should recommend the objectives, method of selecting members, and means of financing the work of the Commission. At the present time, accounting principles are formulated largely by the Accounting Principles Board. Inevitably, therefore, any dissatisfaction with methods of formulating principles is tantamount to dissatisfaction with the Board. High on its agenda for 1971 are other problems which currently obscure the effective disclosure of financial performance, such as the treatment of inter-corporate investments, financial reporting by diversified companies and others.