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Financial Reporting and Tax Strategies of Major Korean Oil Refinery Companies in Response to LIFO Abandonment Mandated by K-IFRS

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Authors
허준혁
Advisor
정운오
Major
경영대학 경영학과
Issue Date
2014-02
Publisher
서울대학교 대학원
Keywords
LIFOLIFO inventory liquidationLIFO reservesmoothnesstax strategyOil refinery companies
Description
학위논문 (석사)-- 서울대학교 대학원 : 경영학과, 2014. 2. 정운오.
Abstract
After K-IFRS roadmap was announced in March 2007, using LIFO method as an inventory valuation method is expected to be prohibited under the new standard. The main issue is that major oil refinery companies who previously used LIFO method anticipated the temporary hike in earnings and tax liability triggered by massive restoration of LIFO reserves, when LIFO is abandoned. Thus, this paper analyzes the companies financial reporting and tax strategies in response to the restoration of LIFO reserve. According to the results, it turned out that companies liquidated significant amount of LIFO inventory over the period before IFRS adoption in order to avoid volatile financial reporting earnings and conduct smooth income. For lowering the increased tax liability, companies temporary boosted the investment in tax-favored equipment and utilized tax credit as a means of lessening tax burden. After the IFRS adoption, it is confirmed that companies reduced the inventory level since the risk of LIFO inventory liquidation and decrease in after-tax cash flow disappeared.
Language
English
URI
https://hdl.handle.net/10371/124494
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College of Business Administration/Business School (경영대학/대학원)Dept. of Business Administration (경영학과)Theses (Master's Degree_경영학과)
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