Switch in accounting produces more earnings and therefore more tax
US companies face paying more tax because international accounting standards rules out a particular form of inventory accounting.
CFO.com reports that around a third of US companies uses ‘last-in first-out’ inventory accounting which is not permitted under IFRS. Research from the Georgia Tech Financial Analysis Lab points to the change creating a boost to earnings and therefore increases taxes.
Professor Charles Mulford at Gerogia Tech is quoted saying. ‘We think that the tax effects could reduce the market values of the affected companies.’
See full Article.
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