The Accounting Review Vol. 38 No. 4 1963
ACCOUNTING FOR THE INVESTMENT CREDIT.
Abstract
The article focuses on accounting principles for the investment credit. Opinion number two of the Accounting Principles Board indicates three separate and acceptable methods of accounting for investment credit. Method number one follows the concept of tax law by treating the credit as a reduction of the cost of the asset and apparently it is the method favored by the majority of the Board. One important advantage of this method is that the depreciable base is ordinarily the same for tax and financial purposes. Method number two follows the concept that the credit is a direct reduction of tax expense to be pro-rated over the life of the asset. An interesting aspect develops when full current use of the Investment Credit is not possible because of the limitation in the law. The investment credit carry-forward may be applied against the tax liability in any one or all of the five succeeding years. The entries under each method would be to write off the carry-forward against the tax liability.
- DOI
- 10.2308/tar-7106797
- Volume
- 38
- Issue
- 4
- Pages
- 714-718
- Language
- en
- Sources
- openalex crossref