The Impacts of New Revised Financial Accounting Standard No.10: Accounting Principle of Inventories on the Earnings Attributes
| Autor: | Yu Ru Wu, 吳育儒 |
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| Rok vydání: | 2011 |
| Druh dokumentu: | 學位論文 ; thesis |
| Popis: | 99 Recently, in conformity with international accounting standards, the SFAS No. 10 (Accounting for Inventory) in Taiwan has been initially revised on 29th November, 2007 based on International Accounting Standard 2, and finally released on January 1st, 2009. There are some important revisions in the SFAS No. 10, including the method of the lower of cost and net realizable value on inventory valuation, the comparison between individual items of inventory, the allocations of fixed manufacturing overhead by normal capacity, and…etc. These changes have influences on the recognition of cost of goods sold thereby resulting in the gross profits and net income. This study examines the impacts of new SFAS No. 10 on accrual quality, earnings predictability and income smoothing using earnings attributes measures from Francis et al. (2004). The sample includes 1,174 public listed firm-quarters with coverage in Taiwan Economic Journal Database (TEJ) for the first quarter, 2008 to the third quarter, 2010. The results show that accrual quality is higher after the SFAS No. 10, suggesting that managers can’t use accounting choice to manipulate inventory value and recognition of gain or loss on inventory valuation. The new SFAS No. 10 leads to that the inventory value reflects real economic value, resulting in raising earnings predictability and income smoothing. Overall, this study suggests that the new SFAS No. 10 mitigates the managers’ earnings manipulate through inventory valuation, and thus provides more relevant financial information on inventory to users. |
| Databáze: | Networked Digital Library of Theses & Dissertations |
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