The offsetting of timing differences

Abstract

The opinions about whether or not negative timing differences can be offset against positive timing differences are closely related to the opinions mentioned in chapter 5B about the valuation of negative timing differences. Those writers advocating a complete neglect of negative timing differences have no problem with this subject. Those writers advocating neglect or the use of a net-of-tax method for that part of the negative timing differences that is larger than the positive ones are, of course, advocating an offsetting of timing differences. Tax-effect accounting leads to many questions about the nature of the resulting balance-sheet items, as was shown in chapter 4. This fact, together with the above-mentioned relationship to the valuation of negative timing differences, is the reason for the treatment of this subject in a separate chapter.