The Tax Basis Financial Reporting Alternative for Nonpublic Firms

Recent changes in tax legislation and financial reporting standards may encourage small, nonpublic companies to choose the tax basis of financial reporting over financial statements prepared in accordance with generally accepted accounting principles. The Tax Reform Act of 1986, for example, require...

Full description

Saved in:
Bibliographic Details
Published in:Accounting horizons 1988-09, Vol.2 (3), p.41
Main Authors: Anthony, Joseph H, Dilley, Steven C
Format: Article
Language:English
Subjects:
Auditing standards
Disclosure
Financial reporting
Financial statements
GAAP
Impacts
Requirements
Tax basis
Tax legislation
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Recent changes in tax legislation and financial reporting standards may encourage small, nonpublic companies to choose the tax basis of financial reporting over financial statements prepared in accordance with generally accepted accounting principles. The Tax Reform Act of 1986, for example, requires dual record keeping for depreciation provisions and a 3rd set of books for new minimum tax provisions. Many of the dual record-keeping costs can be avoided by preparing tax basis statements to be distributed to various user groups. Tax basis financial reporting causes several problems. For instance, taxes and record-keeping costs may be reduced to the detriment of investors and other statement users. Under current auditing standards, tax basis statements must be accompanied by a qualified audit report. Firms considering tax basis statements must consider the overall costs and benefits.
ISSN:0888-7993
1558-7975