Abstract The article presents the comments of authors on the article "Accelerated Depreciation and the Allocation of Income Taxes," by Sidney Davidson, a professor of accountancy published in the April 1958 issue of the journal "The Accounting Review." Davidson analyzed the income tax problem and presented a strong case against allocation. Davidson argues against allocation primarily on the grounds that a firm that is static or growing will never have to repay the liability. So long as the firm follows a regular investment policy, it will receive a gift of having its income tax payments permanently reduced. This approach to income measurement could result in a "cash flow" type of income statement. On grounds that a policy of regular investment in assets subject to depreciation maintained, all expenditures for plant could be charged against current operations. It seems doubtful if such a practice would ever be accepted by either businessmen or accountants. Yet, the firm may never have to repay the permanent trade credit and it seems that this situation is the income tax problem.
Jaedicke et al. (Fri,) studied this question.