• Journal of the Korea Academia-Industrial cooperation Society
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• v.13 no.1
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• pp.164-168
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• 2012

This study suggests the direction to narrow down the difference between financial and tax accounting in relation to borrowing costs. Accounting for capitalization of borrowing costs under accounting standards for non-public entities should be revised to converge into KIFRS. The provision of corporate income tax law relating to capitalization of borrowing costs should be applied on the optional basis rather than compulsory application especially for non-public entities. The range of qualifying assets for capitalization under the tax law should be reviewed to comply with KIFRS.

• Korean Business Review
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• v.17 no.2
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• pp.41-61
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• 2004

Before 2003 the companies in Korea should capitalize the interest expenses that are attributable to the acquisition, construction or production of a qualifying assets. However, according to the revised standard which should be applied from 2003, the companies can either capitalize the interest expenses or recognize as an expense when they are incurred. Therefore almost all the companies confronted with the decision making of accounting choices on the interest capitalization. This paper empirically examines which financial characteristics of the companies affect the accounting choice by using logistic regression model and reviews the sufficiency of the foot notes disclosures regarding the capitalized interest. The variables of the financial characteristics are change of debt-equity ratio, borrowing ratio, qualifying assets ratio, firm size and income smoothing. The results of this study are summarized as follows. First, among the financial characteristics, only qualifying asset ratio has the significant difference between capitalized companies and expensing companies. Second, the results of logistic regression indicate that qualifying asset ratio and firm size have the significant influence on the accounting choices. Therefore, I cannot find the evidence supporting that the companies use the accounting choice to manage the financial ratios.

• 한국산학경영학회:학술대회논문집
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• 2004.11a
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• pp.55-72
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• 2004

Before 2003 the companies In Korea should capitalize the interest expenses that are attributable to the acquisition, construction or production of a qualifying assets. However, according to the revised standard which should be applied from 2003, the companies can either capitalize the interest expenses or recognize as an expense when they are incurred. Therefore almost all the companies confronted with the decision making of accounting choices on the interest capitalization. This paper empirically examines which financial characteristics of the companies affect the accounting choice by using logistic regression model and reviews the sufficiency of the foot notes disclosures regarding the capitalized interest. The variables of the financial characteristics are change of debt-equity ratio, borrowing ratio, qualifying assets ratio, firm sire and income smoothing. The results of this study are summarized as follows. First, among the financial characteristics, only qualifying asset ratio has the significant difference between capitalized companies and expensing companies. Second, the results of logistic regression indicate that qualifying asset ratio and firm size have the significant influence on the accounting choices. Therefore, I cannot find the evidence supporting that the companies use the accounting choice to manage the financial ratios.