부산대학교 도서관

This article discusses the conceptual and practical issues concerning in defining an inflation-adjusted measure of corporate profits in the U.S. It is widely recognized that inflation of the general price level and relative price adjustments distort the meaning of corporate accounts and, therefore, also corporate taxation and the portion of the national income accounts (NIA) that is based on corporate financial statistics. The distortion arises primarily because under current accounting practice, firms carry many physical and financial assets and liabilities at original cost or book value; figures that are expressed in dissimilar units and that may deviate widely from current market value or replacement cost. Accounting practices also differ greatly across firms and between tax and book financial reports for the same company. These practices may create unnecessary inefficiencies in taxation and investment, and increase difficulty in predicting or assessing the cyclical position of the economy. Indeed, there has been some speculation that the recognition of the 1974-75 recession was delayed by the distorting effects of inflation on reported business statistics. The importance of such effects has increased greatly in the past ten years, as has the rate of change of general price levels. Among a number of studies analyzing these issues, several recent papers have concentrated on the impact of inflation on corporate and personal income taxation. The Davidson-Weil and the Tideman-Tucker papers evaluate the potential impact of adoption of inflation-accounting principles recently proposed by the Financial Accounting Standards Board.