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Descrição Detalhada da Publicação
Título Revista
Journal of Accounting and Taxation
Ano (publicação definitiva)
2021
Língua
Inglês
País
Nigéria
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Abstract/Resumo
Deferred tax asset (DTA) is a tax/accounting concept that refers to an asset that may be used to reduce
future tax liabilities of the holder. In the banking sector, it usually refers to situations where a bank has
either overpaid taxes, paid taxes in advance or has carry-over of losses (the latter being the most
common situation). In fact, accounting and tax losses may be used to shield future profits from
taxation, through tax loss carry-forwards. In other words, DTAs are contingent claims, whose
underlying assets are banks future profits. Consequently, the correct approach to value such rights
implies necessarily, the use of a contingent claim valuation framework. Despite that, one common
practice consists of valuing DTAs as though they would be used at 100% without even discounting for
the time value of money. Another common procedure consists of considering a subjective “valuation
allowance”, valuing the deferred tax asset as a certain percentage of the corresponding maximum
value, according to future expectations on the company’s financial performance. The purpose of this
paper is exactly to propose a precise and conceptually sound mathematical approach to value DTAs,
considering future projections of earnings and rates, alongside the DTA’s legal time limit. It will be
shown that with the proposed evaluation techniques, the DTA’s expected value will be much lower than
the values normally used in today’s practice, and the bank’s financial analysis will lead to much more
sound and realistic results.
Agradecimentos/Acknowledgements
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Palavras-chave
Valuation,Deferred tax asset,Banking sector,Balance sheet,Binomial
Classificação Fields of Science and Technology
- Matemáticas - Ciências Naturais
- Ciências da Computação e da Informação - Ciências Naturais
- Economia e Gestão - Ciências Sociais
Registos de financiamentos
Referência de financiamento | Entidade Financiadora |
---|---|
UIDB/04466/2020 | Fundação para a Ciência e a Tecnologia |
UIDB/ 04521/2020 | Fundação para a Ciência e a Tecnologia |