Instructional Case: The Qualitative Characteristics of Accounting Information and SFAS No. 96.

Some accounting academicians strongly support discounting deferred taxes because discounting has higher representational faithfulness than nondiscounting. But Statement of Financial Accounting Standards (SFAS) No. 96, “Accounting for Income Taxes,” prohibits discounting. This case focuses on the FASB's decision to prohibit discounting. Students are asked to analyze and evaluate the qualitative characteristics of discounting versus nondiscounting deferred taxes. The case has been used successfully in conjunction with selected readings in an accounting policy course at the graduate level, but is also appropriate for an undergraduate theory course.