Warianty tytułu
The Impact of Inflation and Tax Rates on the Value of the Enterprise
Języki publikacji
Abstrakty
It is traditionally believed that inflation is attended by the rising effective tax rate if the tax system does not allow for depreciation to reflect the full cost of assets' replacement. The result is a reduction in the income of the firm's owners and, eventually, in the economic value of the firm itself. An attempt is made to demonstrate that a full revalorization of the depreciation allowance relative to the rate of inflation is not a sufficient condition to offset the adverse effects, an additional adjustment in income taxation to the inflation rate is required. When the inflation rate exceeds a certain threshold there appears a gap in the accumulated depreciation fund needed for the replacement, notwithstanding the allowance for a full revalorization of productive assets relative to inflation. The gap is covered from current profits. In order to mantain the value of the firm irrespective of inflation, the real net profit of the firm has to be increased. (original abstract)
Twórcy
autor
Bibliografia
Typ dokumentu
Bibliografia
Identyfikatory
Identyfikator YADDA
bwmeta1.element.ekon-element-000171285693
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