007 Treatment of asset retirement obligation in tax law
An accounting standard of asset retirement obligation has been newly applied since April 1st, 2010, and its amount recorded as debt is discounted to the present value on accounting basis. However, since tax law adopts the defined obligation principle, the interest generated by the obligation is not deductible from taxable income. Therefore, we need to pay attention to the treatment of addition on the attached sheet of tax return and tax effect accounting when we consider the application of this accounting standard. On the other hand, we consider that the tax system requires some revision in order to step closer towards the accounting.
