Research On The Establishment And Implementation Of Enterprise Income Tax Accounting Standards Based On The Supply And Demand Relationship Of Accounting Information

Income Tax Accounting Standard (CAS 18) has been considered as one of the most complex standards of CAS, and its implications for financial reporting attracted limited attention in scholarly circles before this decade. Compared with the United States, Britain and other developed countries, research in accounting for income taxes (AFIT) has started late, which has not yet formed a complete research framework. However, in recent years, both financial accounting and tax researchers have begun to focus on AFIT, so much so that AFIT has become the most active area of accounting research in taxation. To date, CAS has been implemented for over eight years. As indicated by Graham et al. (2012), there are currently contradictions between theoretical and empirical conclusions on application about CAS18.This study contributes to this line of research by theoretical analysis about whether the balance sheet liability method is reasonable, as well as empirical analysis about the effect of CAS 18 implementation.This study is organized as follows:1) Section 2 and 3 review the current scholarly studies and identifies unresolved questions, and then analyze the essential attributes of accounting standards, combined with financial reporting objectives and the quality of accounting information, along with constructing the entire research theoretical framework.2) Section 4 discusses the reasonableness of the balance sheet liability method from the perspective on the formulation of CAS 18. According to the "value relevance", this study suggests that the components of the deferred tax assets (DTA) and deferred tax liabilities (DTL) could be separated into two categories.There is an asymmetrical association between deferred tax assets and liabilities and future tax payments,so only certain components of the DTA have value.Like impairment of assets and similar components of the DTA have no value relevance, which could be tested by Shanghai case.In addition, the value of the DTL has been also questioned ever since inter-period tax allocation became generally accepted accounting principles ("GAAP"). Opponents of inter-period tax allocation argue that in a growing firm most components of the DTL will never reverse or will reverse only in the far future, which reduces their present value to zero or very close to zero. This study suggests that the depreciation-related and similar components of the DTL have no value relevance, irrespective of the reversal period of these temporary differences. And the correct discount factor of depreciation-related DTL is δ/(δ+ρ), so to the rational equity holders, they prefer to hold the asset rather than selling it.3) Section 5 and 6 describe the effect of CAS 18 implementation from the views of accounting information suppliers and demanders separately. This study provides an empirical analysis, which contains questionnaire method, to examine the accountants’ attitude, as well as to explore earnings quality. In fact, the majority of attendances do not satisfy with CAS 18, and most respondents believe that the CAS 18 is difficult to understand and execute.Also, CAS 18 makes the work much more complicated;In addition, according to the accounting information demanders’perspective, this study investigates the relationship between book-tax difference (BTD) and abnormal book-tax difference (ABTD),earnings management(EM) in Chinese-listed companies. This study provides evidence of the incremental usefulness of book-tax differences (BTDs), and the aggregated book-tax gap becomes more and more big from 2008 to 2013.Meanwhile, this study shows ABTD is positively related with EM.4) Based on the theoretical and empirical research, and combined with our unique accounting environment, Section 7 closes with a proposal of a theoretical framework and future path about how to reform CAS 18.The innovations of this study are shown as follows:1) this study has proposed a criterion to help standard-setters judge the CAS18,combined with four dimensions including relevance, intelligibility, reliability and earnings quality.2) the results of this study provide important insights into the drawbacks of the balance sheet liability method, which is different from the earlier study.And the classification of DTA and DTL could help interested persons to understand and estimate the components of DTA and DTL.3) the analysis of CAS 18 may also break through the traditional study method, and this study tests the effect of CAS 18 implementation by an empirical analysis from the views of accounting information suppliers and demanders separately.In particular, this study contribute to examine the relationships between BTD+, BTD-, ABTD+, ABTD- and EM in a major transitional economy.4) the results of the study will be of interest to accounting standard-setters. Therefore, this study put forward a kind of some suggestions about how to reform CAS 18 and where we could go in the future.