Company Tax Loss

Case Study # 102268

Accounting > Tax
Business > Companies
Business > Finance, Investment and Banking

Company Tax Loss

A case study analysis of the Business Objects company and the effect of its tax loss on the company.

764 words () | 3 sources | APA | 2008 United States

Paper Summary:

This paper discusses various factors which must be considered in order to determine whether a tax loss should be carried forward by an organization or not. It discusses the case of the company, Business Objects, and its tax loss. The paper then looks at the effects on the company's free cash flow forecast and employee stock plan and the effect of common stock.

Table of Contents:
Business Objects Valuation Allowance
Effect on Free Cash Flow Forecast
Employee Stock Plan and Effect of Common Stock

From the Paper:

"Business Objects offers a stock-based compensation plan. This impacts the valuation of common stocks in that the costs and income of that program have to be included in the company's balance sheets and the tax impacts carried forward to the best of the company's ability to forecast exercise of options. Deodorant (2005) claims that in order to properly account for an options program's impact on common stock valuation, the value of the options plan must be determined ad this value subtracted from the overall equity of the company before the common stock value is derived. Using this method, Table 2 provides the value of shares outstanding, minus the value of outstanding options, as calculated in Excel."

Sample of Sources Used:

Business Objects. (2005). Annual Report, Form 10K. Retrieved February 26, 2007, from http://www.businessobjects.com/pdf/investors/sa2005_10k.pdf.
Damodaran, A. (2005). Employee stock options (ESOPs) and restricted stock: Valuation effects and consequences. Retrieved February 26, 2007, from http://pages.stern.nyu.edu/~adamodar/pdfiles/papers/esops.pdf.
Financial Accounting Standards Board. (1992). Summary of statement no. 109. Retrieved February 26, 2007, from http://209.85.165.104/search?q=cache:rqNUDX4J2lgJ:www.fasb.org/st/summary/stsum109.shtml+positive+negative+evidence+valuation+allowance&hl=en&ct=clnk&cd=1&gl=us.