Revenue Recognition and Measurement. Accounting Principles vs. Tax Rules for Romanian Entities

Author:Lecturer Mirela PĂUNESCU, Ph. D.

JEL:H20, H25, M41

DOI:

Keywords:IFRS, taxable profit, tax decisions, revenue recognition

Abstract:
In this article the author addressed two main questions: What are the most frequent disputes in Romania, between taxpayers and tax inspectors, with regard to revenue recognition and measurement? After an entity switches to IFRS, is it more likely for these matters to be more frequent, or, on the contrary, less common, since the IFRS should answer these questions? The analysis was conducted for the tax inspections carried out between 2005 and 2013, when Romanian Accounting Standards were based on the transposed European Accounting Directives. This research is relevant because Romania is one of the EU member states, a country applying the European Directives and whose tax system is quasi – dependent on financial accounting (like many other EU countries). Even if all cases investigated involved entities applying domestic regulations in line with European Directives, we will extrapolate our findings to future or past IFRS adopters, by taking into account the differences with possible consequences on taxable profits between RO-GAAP and IFRS.\r\nAs for the methodology, empirical research methods were used, which in this case consisted of analyzing all relevant tax decisions the author was able to identify on the Romanian tax body’s website, decisions involving revenue recognition disputes between entities and tax inspectors.\r\n

---