Accounting ForFuture‐Oriented Expenditures: Change Is Needed
Abstract
Financial reporting standards require that many future‐oriented expenditures for intangibles, such as development costs and personnel training, be expensed in the current period. These standards cause such expenditures to be indistinguishable from expenditures for current revenues, and penalize the earnings of firms making future‐oriented expenditures for intangibles. The current focus on earnings encourages firms to sacrifice long‐term economic objectives for higher reported earnings. This paper analyzes the need for improved reporting for future oriented expenditures. Improved accounting for future‐oriented expenditures would enhance the market’s ability to value stocks, improve company performance, and benefit investors and creditors.
Keywords
Citation
Fuglister, J. and Paxton, W. (1990), "Accounting ForFuture‐Oriented Expenditures: Change Is Needed", American Journal of Business, Vol. 5 No. 1, pp. 13-18. https://doi.org/10.1108/19355181199000001
Publisher
:MCB UP Ltd
Copyright © 1990, MCB UP Limited