Riset Pajak dan Akuntansi | Dwi Martani Paper Vinge Present
ANALYSIS OF PRESENTATION AND
DISCLOSURE OF REVALUATION ASSET
BASED ON TAX REGULATION IN THE
FINANCIAL STATEMENT 2015
VINGE GUSVRIKA ELANDA and DWI MARTANI
Agenda
Introduction
Literature Review
Research Method
Discussion and Analysis
Conclusion
2
Introduction
Revaluation of assets is a
reassessment of the value of the
assets owned by the company.
Revaluation model and fair value
would increase financial
statement relevance because the
assets reflect the fair value or
actual value.
Treatment of revaluation of
assets in Indonesia can be done
either in accounting or tax.
Revaluation or reappraisal is
usually performed on fixed assets
or investment properties.
Revaluation model is a
accounting policy for fixed asset
and fair value model is
accounting policy for property
investment.
3
Introduction
TAX
• The revaluation are also regulated in the Income Tax Act Article 4
paragraph (1) letter m stating that “the excess of the revaluation of
a fixed assets is the object of income tax”.
• Tax only recognizes the excess over the revaluation of fixed
assets. In other words, only the excess (gain) on revaluation of
fixed assets are taxed but impairment not tax deductible.
• Further rules regarding the revaluation of fixed assets in the tax
regulated in PMK 79/PMK.08/2008:
• Increasing of asset tax by 10% final and additional tax (tax
statutory tax-10%) if company sale the asset
• Revaluation only allow every 5 year
4
Introduction
• PSAK 16 in 1994, revaluation is not allowed for assessment
under the acquisition price, but a deviation from this provision
may be carried out under the provisions of the Government.
• PSAK 16 (2007), Revaluation is an accounting policy choices
that must implement consistently.
• Changes in accounting standards have led to differences
between the tax and accounting treatment of fixed assets
caused the decreasing incentive for tax revaluation
• To encourage domestic economy and provide incentives to
companies, the government issued a new policy that PMK
191/PMK.010/2015 and was revised in PMK 233 / PMK.03 /
2015.
5
Introduction
• Piera (2007) found that the company in the Swiss tend to revalue fixed
assets because of the leverage and international stakeholders.
• Su Seng (2010) found the intensity of the assets, as the factors that
drive the company revalued the assets.
• The earlier study in Indonesia only conduct an analysis of the
implications of the corporate income tax on revaluation.
• This research focuses on:
– How impact the new tax regulation on revaluation to the companies
decision on revaluation
• Company characteristic
• Type of asset
– What factors that impact of revaluation decision (size, capital
intensity)
6
Literature Review
Revaluation of Assets According to Accounting
• The accounting treatment for the revaluation of assets
described in the revised PSAK 16, 2015.
• The Company can select measurement after the initial
recognition of fixed assets, one of which is the revaluation
model in order to provide more relevant information for
decision-making companies.
• According to IAS 16 (2015), the revaluation conducted by the
company should be conducted regularly so that the carrying
amount and the amount determined using the fair value is not
materially different at the end of the period.
7
Literature Review
Revaluation of Assets According to Accounting
• The revaluation of assets in accounting is also set in IAS 13 Investment
Property, which in IAS known as the revaluation of the fair value model.
• Investment property in accordance with accounting standards are the
property of the company or tenant (whether in the form of land or
building, or both) to earn rentals or capital appreciation, or both, and not
for production or supply of goods/services for administrative purposes
and not for sale in everyday business activities.
• Gains or losses on the results of the change in fair value of investment
property are recognized in profit or loss in the period the change occurs.
Revaluation of assets performed by the company is used to reflect the
current asset value (Martani, 2012)
8
Literature Review
Revaluation of Assets According to Tax Regulation
PMK 79 / 2008
• Further rules regarding the revaluation of the assets company's is set in
the PMK 79 (2008).
• The types of assets that can be revalued in the PMK 79 (2008) is all
tangible fixed assets including land use rights that have certificates and
buildings, as well as all fixed assets tangible excluding land located in
Indonesia, owned and used to obtain, collect and preserve income into
the taxable income.
• Revaluation according to this taxation can not be done before five years
• The revaluation must be based on the fair value that performed by
certified appraisal.
9
Literature Review
Revaluation of Assets According to Tax Regulation PMK 191/ 2015
• The new government regulations that PMK 191//2015 and amended by
PMK 233/2015.
– Lower tariff 3% (end of 2015), 4% (June, 30, 2016), 6% (end of 2016)
• There are some differences between the PMK 79 (2008) with PMK 191
(2015),
– the taxpayer is able to perform revaluation are a corporate taxpayer,
Permanent Establishment (BUT), an individual taxpayer who does the
bookkeeping, including taxpayer which has obtained a license to keep books
in English and the currency of the US dollar, as well as the taxpayer who is
still in a period of 5 years from the revaluation regulated in PMK
79/PMK.03/2008.
– Fixed assets can be revalued, where the PMK 191 (2015) the company may
revalue some or all fixed assets are located in Indonesia.
10
Literature Review
• Revaluation of Assets According to Technical Bulletin 11 About
Assets Revaluation
• Issues raised in technical bulletins 11 is about five things:
– Relationships revaluation of fixed assets between tax and accounting,
– Approval DJP for submission of application for revaluation of fixed assets of
the company,
– the accounting treatment of final income tax charged to revaluation of fixed
assets,
– current tax and deferred results from revaluation of fixed assets,
– the tax rate to measure the impact of deferred taxes as a result of the
revaluation of fixed assets (either for tax purposes or for the purposes of
accounting and taxation).
• Companies are allowed to choose revaluation:
– only for tax purposes,
– only for accounting purposes or
– for tax and accounting purposes.
11
Literature Review
• Revaluation of Assets According to Technical Bulletin 11 About
Assets Revaluation
• Tax purposes only
– it should get approval from the DJP within a certain time.
– DJP has the authority to reject or accept the proposal on the revaluation. For
companies that have received approval from the DJP in doing the
revaluation
– the current tax expense (3%; 4% & 6% of the excess of revaluation) arising
from these events are recognized in profit or loss.
– the revaluation event temporary differences arise because the tax base is
larger than the amount recorded in accounting.
12
Literature Review
• Revaluation of Assets According to Technical Bulletin 11 About
Assets Revaluation
• Accounting purposes only
– the amount of taxes paid is recognized in other comprehensive income and
accumulated in equity in the revaluation surplus.
– No tax paid
– No temporary difference between tax and accounting because the
revaluation surplus did not recognize in tax purposes.
• Accounting and tax purposes
– Permit from ministry of finance
– Tax paid according the regulation
– No temporary differences between the carrying amounts for accounting with
their respective tax bases.
– But if the company want to revalue asset before 5 year, the company will use
accounting only revaluation purposes.
13
Literature Review
Hypothesis 1
• The lenders use accounting information to analyze the company's
financial position and assess the risk of the company when the lender
will approve the loan to be granted.
• Revaluation will increase the book value of total assets that would give
effect to the creditors that the company's financial ratios well.
• With the report's strong financial position will have an impact on the
confidence of creditors that the company can pay the debt. The
preparation of this hypothesis was based on previous research
conducted by (Piera, 2007) and (Seng and Su, 2010).
• H1: Companies with high leverage level have a high probability to
revalue fixed assets
14
Literature Review
Hypothesis 2
• Borrowing capacity of a company depends not only on the level of
leverage but also on the company's ability to repay debt.
• The decline in cash flow from operations may cause lenders to be
concerned with the company's liquidity.
• An Australian study by (Cotter and Zimmer, 1995) argues that a
revaluation may help to convince debtholders about the company's
ability to pay the debt through ownership potential value of the
company's assets are largely based on market value.
• Therefore, the revaluation undertaken will help the company to repay
the loan by the company (Seng and Su, 2010).
• H2: Companies that decreased cash flow operating activities more likely
to have a high probability to revalue fixed assets
15
Literature Review
• Hypothesis 3
• Lin and Peasnel, 2000b found a positive relationship between the
intensity of fixed assets by the manager's decision to conduct the
revaluation.
• Tay (2009) found the influence of the revaluation of assets with fixed
asset intensity.
• Seng and Su (2010) also find the relation between the fixed asset
intensity and revaluation of asset.
• H3: Companies that have a high intensity of fixed assets that have a
high probability to revalue fixed assets
16
Literature Review
Hypothesis 4
• To reduce the adverse political influence, companies tend to avoid
income/profit companies that are too high (Standish and Ung, 1982).
• The revaluation of an asset can be an effective way for companies to
reduce profits through increased depreciation charges on the rise in
assets that were revalued (Lin and Peasnell, 2000b).
• Seng and Su (2010) also find that the company has a large size will
tend to revalue fixed assets of the company.
• H4: Companies with large size has a high probability to revalue fixed
assets
17
Research Methodology - Framework
• Leverage
• Declining Cash
FlowFrom Operations
• Fixed Asset Intensity
• Firm Size
Policy of Revaluation
Yi = α + β1LEVi + β2DCFFOi + β3INTATi + β4SIZEi
Yi
LEVi
DCFFOi
INTATi
SIZEi
i
:
Revaluation of fixed assets of companies
listed on the Stock Exchange in 2015 (using
+
a dummy, one for the revaluation and zero for which no Revaluation)
:
The level of leverage measured by the ratio of total debt to total assets
:
Decrease in operating cash flow of the company is measured from the ratio of
decrease in cash flow from operating activities of the company in year t to the year t -1 to the
decline in operating cash flow in year t
:
The intensity or the proportion of fixed assets owned by the company measured from
the ratio of total fixed assets to total assets (%)
:
The size of the company with natural logarithma measured from natural logarithma on
total assets in year t
18
Research Methodology – Data and Sample
• Data from this study are all listed company listed in Indonesia Stock
Exchange until 2015. The number of companies listed on the Stock
Exchange in 2015 was 525 companies with various types of industries.
• The sampling method the researchers did was by purposive sampling, with
the characteristics of sampling are companies listed on the Stock Exchange
until 2015 (1) and availability of data is a company's financial statements
were audited in 2015 (2).
No.
Description
1
Company listed on the Stock Exchange
2
The number of samples of the company that has first and
second criteria
Company
525
406
Less: company data is incomplete (the third criterion)
The number of samples to be studied
(83)
325
19
Discussion and Analysis - Descriptive statistics
Company
197
Percentage
60.6
Doing Revaluation
128
39.4
Total
325
100
Not doing Revaluation
•
There are 39.4% of the total sample used, revalued assets.
•
Not many companies are using the revaluation model in measuring
assets, both for fixed assets or investment properties.
•
Of the 128 companies that perform the revaluation, there are some
companies that using revaluation or fair value model in accounting
policies, before tax regulation issued 2015 and some companies
changed cost model into the revaluation / fair value model.
20
Discussion and Analysis - Descriptive statistics
Amount of Company
Percentage
Industry
% Total
Asset
Revaluation
Listed
Total
Revaluation
Consumer Staples :
Food Product
Beverage
Personal Product
Energy :
Oil, Gas, and Fuel
Finance :
Insurance
Banks
Consumer Finance
Capital Market
Materials :
Metals and Mining
Construction Materials
Chemical
Paper and Forest Product
Container and Packaging
13.84%
13.57%
0.11%
0.16%
13.38%
13.38%
6.94%
1.64%
3.27%
0.94%
1.09%
16.96%
6.17%
2.16%
3.94%
1.98%
2.71%
14
11
1
2
2
2
38
11
24
2
1
21
8
1
4
4
4
60
38
4
5
39
33
90
15
42
15
17
69
26
6
16
9
12
11%
23%
29%
25%
40%
5%
6%
42%
73%
57%
13%
6%
30%
31%
17%
25%
44%
33%
2%
30%
16%
21
Discussion and Analysis - Descriptive statistics
Industry
Infrastructure dan
Transportation :
Construction and Technique
Trading and Distributor
Machine Equipment
Highway, Airports, and
Seaport
Airlines
Electric Equipment
Commercial services and
supplies
Road and Rail
Building Product
Real Estate
Shipping
Communication Service :
Variety of Communication
Wireless Communication
Amount of Company
Percentage
% Total
Asset
Revaluation
Listed
Total
Revaluation
20.06%
23
138
18%
17%
2.63%
0.99%
0.77%
4
1
2
17
12
4
24%
8%
50%
0.68%
2
7
29%
1.47%
1.35%
1
1
1
7
100%
14%
2.14%
2
7
29%
1.87%
1.57%
5.74%
0.85%
13.32%
7.42%
5.90%
1
1
7
1
6
4
2
11
6
50
13
12
6
6
9%
17%
14%
8%
50%
67%
33%
5%
22
Discussion and Analysis - Descriptive statistics
Industry
Information Technology :
Software and Internet
Service
Health :
Health care providers
Others :
Automobile and auto
Components
Media
Hotel, restaurant and leisure
Household Goods
Textiles, apparel, luxury
goods
Specialty Retail
Distributors
Total
Amount of Company
Percentage
% Total
Asset
Revaluation
Listed
Total
Revaluation
1.09%
1
11
1%
9%
1.09%
1
3
0.71%
0.71%
13.71%
3
3
20
15
9
89
1.67%
6
11
55%
2.93%
2.10%
1.61%
2
4
3
14
7
5
14%
57%
60%
2.19%
2
17
12%
2.26%
0.95%
100%
2
1
128
11
6
523
18%
17%
33%
2%
16%
100%
20%
33%
22%
23
Discussion and Analysis – Types of Asset
1
2
3
4
Various Asset Revaluation
Company
All of Fixed Assets
Most of Fixed Assets
Land
Land and others
Building
Building and others
Land and Building
Land, building and others
Others
Investment Property
Investment Property and Fixed Asset
Total
28
71
18
2
2
7
21
8
13
26
3
128
Percentage
Most of Fixed
Company
Assets
22%
55%
25%
3%
3%
10%
30%
11%
18%
20%
2%
24
Data and Analysis – Accounting Policy
Company
Percentage
Tax Only
35
27.3
Accounting Only
48
37.5
Tax and Accounting
45
35.2
Total
128
100
Company
Percentage
•
Tax incentive increase the number or company that doing
devaluation 80 companies (35 + 45)
25
Data and Analysis - Descriptive statistics
Variable
REV
LEV
DCFFO
INTSY
SIZE
Mean
0.39
11.93
-0.31
6.14
29.87
Std. Deviation
0.49
10.76
7.54
2.63
1.99
Minimum
0.00
0.02
-70.31
-2.73
20.76
Maximum
1.00
76.80
44.60
9.93
39.10
26
Data and Analysis – Regression Result
Variabel
Constant
Exp. Sig.
Coef.
Odd
Ratio
Sig. Level
---
-58.696
0.000
0.000
LEV
H1
+
-0.030
0.971
0.118
DCFFO
H2
+
-0.001
0.999
0.949
INTSY
H3
+
1.148
3.152
0.000**
SIZE
H4
+
1.669
5.307
0.000**
Total (N)
**
325
Significant Variable
27
Data and Analysis
Leverage
•
•
Leverage variable has no significant influence with the dependent variable
(revaluation).
The results of this study not inline with the research (Piera, 2007). However, the
results of this research together with research conducted (Seng and Su, 2010)
found no significant influence between leverage the company revalued its
decision.
Declining cash flow from operation
•
Declining cash flow from operation also do not have a significant influence on the
revaluation.
•
The results was the same with previous studies conducted by (Seng and Su,
2010) found no relation between the decline in cash flow from operating activities
by the company's decision to revalued their assets.
•
The decline in operating cash flow also has no influence on the decision of
companies in Indonesia because of the revaluation is done more towards tax
benefit in the future.
28
Data and Analysis
Fixed Assets intensity
•
•
•
Fixed asset intensity proved to have significant influence with the
revaluation of assets.
The results of this research have inline with the study by (Seng and
Su, 2010), (Lin and Peasnel, 2000b), and (Tay, 2009) which says
that the intensity of the fixed assets of the company influence the
decisions of significant revaluation of assets.
Intensity of fixed asset will create significant impact of revaluation
on total expense and future earning.
Firm size
•
•
Firm size also have the same results with previous studies (Seng
and Su, 2010), and (Iatridis, 2012) which found a significant
influence between firm size and revaluation of the company's
decision.
The firm size has a significant influence on the decision of the
company revalued or in other words the size of the company
determines the company's decision to conduct a revaluation or not.
29
Conclusion
Conclusion
•
•
•
Companies that revaluation its assets is only 39.4% of the sample studied, or
128 companies, which dominate the financial sector (38 companies). This
study also shows that 55% of companies carry out revaluation for the majority
of fixed assets or 71 companies.
Type of revaluation of the most widely used by the company is the revaluation
for accounting purposes, with a percentage of 37.5% or 48 companies.
The study also proves that there are two significant factors that influence the
company's decision to revalue the company's assets, namely fixed asset
intensity and size of the company but leverage and decreased cash flow
operating activities were not significant.
Implication
•
The accounting standard was considered by company when decide to follow
the new tax regulation, so DJP must consider accounting standard when
produce or revise the tax regulation.
•
Revaluation will decrease of tax payment in the future 4-20 year, because of
deductible depreciation expense of revaluation assets.
•
30
THANK YOU
31
DISCLOSURE OF REVALUATION ASSET
BASED ON TAX REGULATION IN THE
FINANCIAL STATEMENT 2015
VINGE GUSVRIKA ELANDA and DWI MARTANI
Agenda
Introduction
Literature Review
Research Method
Discussion and Analysis
Conclusion
2
Introduction
Revaluation of assets is a
reassessment of the value of the
assets owned by the company.
Revaluation model and fair value
would increase financial
statement relevance because the
assets reflect the fair value or
actual value.
Treatment of revaluation of
assets in Indonesia can be done
either in accounting or tax.
Revaluation or reappraisal is
usually performed on fixed assets
or investment properties.
Revaluation model is a
accounting policy for fixed asset
and fair value model is
accounting policy for property
investment.
3
Introduction
TAX
• The revaluation are also regulated in the Income Tax Act Article 4
paragraph (1) letter m stating that “the excess of the revaluation of
a fixed assets is the object of income tax”.
• Tax only recognizes the excess over the revaluation of fixed
assets. In other words, only the excess (gain) on revaluation of
fixed assets are taxed but impairment not tax deductible.
• Further rules regarding the revaluation of fixed assets in the tax
regulated in PMK 79/PMK.08/2008:
• Increasing of asset tax by 10% final and additional tax (tax
statutory tax-10%) if company sale the asset
• Revaluation only allow every 5 year
4
Introduction
• PSAK 16 in 1994, revaluation is not allowed for assessment
under the acquisition price, but a deviation from this provision
may be carried out under the provisions of the Government.
• PSAK 16 (2007), Revaluation is an accounting policy choices
that must implement consistently.
• Changes in accounting standards have led to differences
between the tax and accounting treatment of fixed assets
caused the decreasing incentive for tax revaluation
• To encourage domestic economy and provide incentives to
companies, the government issued a new policy that PMK
191/PMK.010/2015 and was revised in PMK 233 / PMK.03 /
2015.
5
Introduction
• Piera (2007) found that the company in the Swiss tend to revalue fixed
assets because of the leverage and international stakeholders.
• Su Seng (2010) found the intensity of the assets, as the factors that
drive the company revalued the assets.
• The earlier study in Indonesia only conduct an analysis of the
implications of the corporate income tax on revaluation.
• This research focuses on:
– How impact the new tax regulation on revaluation to the companies
decision on revaluation
• Company characteristic
• Type of asset
– What factors that impact of revaluation decision (size, capital
intensity)
6
Literature Review
Revaluation of Assets According to Accounting
• The accounting treatment for the revaluation of assets
described in the revised PSAK 16, 2015.
• The Company can select measurement after the initial
recognition of fixed assets, one of which is the revaluation
model in order to provide more relevant information for
decision-making companies.
• According to IAS 16 (2015), the revaluation conducted by the
company should be conducted regularly so that the carrying
amount and the amount determined using the fair value is not
materially different at the end of the period.
7
Literature Review
Revaluation of Assets According to Accounting
• The revaluation of assets in accounting is also set in IAS 13 Investment
Property, which in IAS known as the revaluation of the fair value model.
• Investment property in accordance with accounting standards are the
property of the company or tenant (whether in the form of land or
building, or both) to earn rentals or capital appreciation, or both, and not
for production or supply of goods/services for administrative purposes
and not for sale in everyday business activities.
• Gains or losses on the results of the change in fair value of investment
property are recognized in profit or loss in the period the change occurs.
Revaluation of assets performed by the company is used to reflect the
current asset value (Martani, 2012)
8
Literature Review
Revaluation of Assets According to Tax Regulation
PMK 79 / 2008
• Further rules regarding the revaluation of the assets company's is set in
the PMK 79 (2008).
• The types of assets that can be revalued in the PMK 79 (2008) is all
tangible fixed assets including land use rights that have certificates and
buildings, as well as all fixed assets tangible excluding land located in
Indonesia, owned and used to obtain, collect and preserve income into
the taxable income.
• Revaluation according to this taxation can not be done before five years
• The revaluation must be based on the fair value that performed by
certified appraisal.
9
Literature Review
Revaluation of Assets According to Tax Regulation PMK 191/ 2015
• The new government regulations that PMK 191//2015 and amended by
PMK 233/2015.
– Lower tariff 3% (end of 2015), 4% (June, 30, 2016), 6% (end of 2016)
• There are some differences between the PMK 79 (2008) with PMK 191
(2015),
– the taxpayer is able to perform revaluation are a corporate taxpayer,
Permanent Establishment (BUT), an individual taxpayer who does the
bookkeeping, including taxpayer which has obtained a license to keep books
in English and the currency of the US dollar, as well as the taxpayer who is
still in a period of 5 years from the revaluation regulated in PMK
79/PMK.03/2008.
– Fixed assets can be revalued, where the PMK 191 (2015) the company may
revalue some or all fixed assets are located in Indonesia.
10
Literature Review
• Revaluation of Assets According to Technical Bulletin 11 About
Assets Revaluation
• Issues raised in technical bulletins 11 is about five things:
– Relationships revaluation of fixed assets between tax and accounting,
– Approval DJP for submission of application for revaluation of fixed assets of
the company,
– the accounting treatment of final income tax charged to revaluation of fixed
assets,
– current tax and deferred results from revaluation of fixed assets,
– the tax rate to measure the impact of deferred taxes as a result of the
revaluation of fixed assets (either for tax purposes or for the purposes of
accounting and taxation).
• Companies are allowed to choose revaluation:
– only for tax purposes,
– only for accounting purposes or
– for tax and accounting purposes.
11
Literature Review
• Revaluation of Assets According to Technical Bulletin 11 About
Assets Revaluation
• Tax purposes only
– it should get approval from the DJP within a certain time.
– DJP has the authority to reject or accept the proposal on the revaluation. For
companies that have received approval from the DJP in doing the
revaluation
– the current tax expense (3%; 4% & 6% of the excess of revaluation) arising
from these events are recognized in profit or loss.
– the revaluation event temporary differences arise because the tax base is
larger than the amount recorded in accounting.
12
Literature Review
• Revaluation of Assets According to Technical Bulletin 11 About
Assets Revaluation
• Accounting purposes only
– the amount of taxes paid is recognized in other comprehensive income and
accumulated in equity in the revaluation surplus.
– No tax paid
– No temporary difference between tax and accounting because the
revaluation surplus did not recognize in tax purposes.
• Accounting and tax purposes
– Permit from ministry of finance
– Tax paid according the regulation
– No temporary differences between the carrying amounts for accounting with
their respective tax bases.
– But if the company want to revalue asset before 5 year, the company will use
accounting only revaluation purposes.
13
Literature Review
Hypothesis 1
• The lenders use accounting information to analyze the company's
financial position and assess the risk of the company when the lender
will approve the loan to be granted.
• Revaluation will increase the book value of total assets that would give
effect to the creditors that the company's financial ratios well.
• With the report's strong financial position will have an impact on the
confidence of creditors that the company can pay the debt. The
preparation of this hypothesis was based on previous research
conducted by (Piera, 2007) and (Seng and Su, 2010).
• H1: Companies with high leverage level have a high probability to
revalue fixed assets
14
Literature Review
Hypothesis 2
• Borrowing capacity of a company depends not only on the level of
leverage but also on the company's ability to repay debt.
• The decline in cash flow from operations may cause lenders to be
concerned with the company's liquidity.
• An Australian study by (Cotter and Zimmer, 1995) argues that a
revaluation may help to convince debtholders about the company's
ability to pay the debt through ownership potential value of the
company's assets are largely based on market value.
• Therefore, the revaluation undertaken will help the company to repay
the loan by the company (Seng and Su, 2010).
• H2: Companies that decreased cash flow operating activities more likely
to have a high probability to revalue fixed assets
15
Literature Review
• Hypothesis 3
• Lin and Peasnel, 2000b found a positive relationship between the
intensity of fixed assets by the manager's decision to conduct the
revaluation.
• Tay (2009) found the influence of the revaluation of assets with fixed
asset intensity.
• Seng and Su (2010) also find the relation between the fixed asset
intensity and revaluation of asset.
• H3: Companies that have a high intensity of fixed assets that have a
high probability to revalue fixed assets
16
Literature Review
Hypothesis 4
• To reduce the adverse political influence, companies tend to avoid
income/profit companies that are too high (Standish and Ung, 1982).
• The revaluation of an asset can be an effective way for companies to
reduce profits through increased depreciation charges on the rise in
assets that were revalued (Lin and Peasnell, 2000b).
• Seng and Su (2010) also find that the company has a large size will
tend to revalue fixed assets of the company.
• H4: Companies with large size has a high probability to revalue fixed
assets
17
Research Methodology - Framework
• Leverage
• Declining Cash
FlowFrom Operations
• Fixed Asset Intensity
• Firm Size
Policy of Revaluation
Yi = α + β1LEVi + β2DCFFOi + β3INTATi + β4SIZEi
Yi
LEVi
DCFFOi
INTATi
SIZEi
i
:
Revaluation of fixed assets of companies
listed on the Stock Exchange in 2015 (using
+
a dummy, one for the revaluation and zero for which no Revaluation)
:
The level of leverage measured by the ratio of total debt to total assets
:
Decrease in operating cash flow of the company is measured from the ratio of
decrease in cash flow from operating activities of the company in year t to the year t -1 to the
decline in operating cash flow in year t
:
The intensity or the proportion of fixed assets owned by the company measured from
the ratio of total fixed assets to total assets (%)
:
The size of the company with natural logarithma measured from natural logarithma on
total assets in year t
18
Research Methodology – Data and Sample
• Data from this study are all listed company listed in Indonesia Stock
Exchange until 2015. The number of companies listed on the Stock
Exchange in 2015 was 525 companies with various types of industries.
• The sampling method the researchers did was by purposive sampling, with
the characteristics of sampling are companies listed on the Stock Exchange
until 2015 (1) and availability of data is a company's financial statements
were audited in 2015 (2).
No.
Description
1
Company listed on the Stock Exchange
2
The number of samples of the company that has first and
second criteria
Company
525
406
Less: company data is incomplete (the third criterion)
The number of samples to be studied
(83)
325
19
Discussion and Analysis - Descriptive statistics
Company
197
Percentage
60.6
Doing Revaluation
128
39.4
Total
325
100
Not doing Revaluation
•
There are 39.4% of the total sample used, revalued assets.
•
Not many companies are using the revaluation model in measuring
assets, both for fixed assets or investment properties.
•
Of the 128 companies that perform the revaluation, there are some
companies that using revaluation or fair value model in accounting
policies, before tax regulation issued 2015 and some companies
changed cost model into the revaluation / fair value model.
20
Discussion and Analysis - Descriptive statistics
Amount of Company
Percentage
Industry
% Total
Asset
Revaluation
Listed
Total
Revaluation
Consumer Staples :
Food Product
Beverage
Personal Product
Energy :
Oil, Gas, and Fuel
Finance :
Insurance
Banks
Consumer Finance
Capital Market
Materials :
Metals and Mining
Construction Materials
Chemical
Paper and Forest Product
Container and Packaging
13.84%
13.57%
0.11%
0.16%
13.38%
13.38%
6.94%
1.64%
3.27%
0.94%
1.09%
16.96%
6.17%
2.16%
3.94%
1.98%
2.71%
14
11
1
2
2
2
38
11
24
2
1
21
8
1
4
4
4
60
38
4
5
39
33
90
15
42
15
17
69
26
6
16
9
12
11%
23%
29%
25%
40%
5%
6%
42%
73%
57%
13%
6%
30%
31%
17%
25%
44%
33%
2%
30%
16%
21
Discussion and Analysis - Descriptive statistics
Industry
Infrastructure dan
Transportation :
Construction and Technique
Trading and Distributor
Machine Equipment
Highway, Airports, and
Seaport
Airlines
Electric Equipment
Commercial services and
supplies
Road and Rail
Building Product
Real Estate
Shipping
Communication Service :
Variety of Communication
Wireless Communication
Amount of Company
Percentage
% Total
Asset
Revaluation
Listed
Total
Revaluation
20.06%
23
138
18%
17%
2.63%
0.99%
0.77%
4
1
2
17
12
4
24%
8%
50%
0.68%
2
7
29%
1.47%
1.35%
1
1
1
7
100%
14%
2.14%
2
7
29%
1.87%
1.57%
5.74%
0.85%
13.32%
7.42%
5.90%
1
1
7
1
6
4
2
11
6
50
13
12
6
6
9%
17%
14%
8%
50%
67%
33%
5%
22
Discussion and Analysis - Descriptive statistics
Industry
Information Technology :
Software and Internet
Service
Health :
Health care providers
Others :
Automobile and auto
Components
Media
Hotel, restaurant and leisure
Household Goods
Textiles, apparel, luxury
goods
Specialty Retail
Distributors
Total
Amount of Company
Percentage
% Total
Asset
Revaluation
Listed
Total
Revaluation
1.09%
1
11
1%
9%
1.09%
1
3
0.71%
0.71%
13.71%
3
3
20
15
9
89
1.67%
6
11
55%
2.93%
2.10%
1.61%
2
4
3
14
7
5
14%
57%
60%
2.19%
2
17
12%
2.26%
0.95%
100%
2
1
128
11
6
523
18%
17%
33%
2%
16%
100%
20%
33%
22%
23
Discussion and Analysis – Types of Asset
1
2
3
4
Various Asset Revaluation
Company
All of Fixed Assets
Most of Fixed Assets
Land
Land and others
Building
Building and others
Land and Building
Land, building and others
Others
Investment Property
Investment Property and Fixed Asset
Total
28
71
18
2
2
7
21
8
13
26
3
128
Percentage
Most of Fixed
Company
Assets
22%
55%
25%
3%
3%
10%
30%
11%
18%
20%
2%
24
Data and Analysis – Accounting Policy
Company
Percentage
Tax Only
35
27.3
Accounting Only
48
37.5
Tax and Accounting
45
35.2
Total
128
100
Company
Percentage
•
Tax incentive increase the number or company that doing
devaluation 80 companies (35 + 45)
25
Data and Analysis - Descriptive statistics
Variable
REV
LEV
DCFFO
INTSY
SIZE
Mean
0.39
11.93
-0.31
6.14
29.87
Std. Deviation
0.49
10.76
7.54
2.63
1.99
Minimum
0.00
0.02
-70.31
-2.73
20.76
Maximum
1.00
76.80
44.60
9.93
39.10
26
Data and Analysis – Regression Result
Variabel
Constant
Exp. Sig.
Coef.
Odd
Ratio
Sig. Level
---
-58.696
0.000
0.000
LEV
H1
+
-0.030
0.971
0.118
DCFFO
H2
+
-0.001
0.999
0.949
INTSY
H3
+
1.148
3.152
0.000**
SIZE
H4
+
1.669
5.307
0.000**
Total (N)
**
325
Significant Variable
27
Data and Analysis
Leverage
•
•
Leverage variable has no significant influence with the dependent variable
(revaluation).
The results of this study not inline with the research (Piera, 2007). However, the
results of this research together with research conducted (Seng and Su, 2010)
found no significant influence between leverage the company revalued its
decision.
Declining cash flow from operation
•
Declining cash flow from operation also do not have a significant influence on the
revaluation.
•
The results was the same with previous studies conducted by (Seng and Su,
2010) found no relation between the decline in cash flow from operating activities
by the company's decision to revalued their assets.
•
The decline in operating cash flow also has no influence on the decision of
companies in Indonesia because of the revaluation is done more towards tax
benefit in the future.
28
Data and Analysis
Fixed Assets intensity
•
•
•
Fixed asset intensity proved to have significant influence with the
revaluation of assets.
The results of this research have inline with the study by (Seng and
Su, 2010), (Lin and Peasnel, 2000b), and (Tay, 2009) which says
that the intensity of the fixed assets of the company influence the
decisions of significant revaluation of assets.
Intensity of fixed asset will create significant impact of revaluation
on total expense and future earning.
Firm size
•
•
Firm size also have the same results with previous studies (Seng
and Su, 2010), and (Iatridis, 2012) which found a significant
influence between firm size and revaluation of the company's
decision.
The firm size has a significant influence on the decision of the
company revalued or in other words the size of the company
determines the company's decision to conduct a revaluation or not.
29
Conclusion
Conclusion
•
•
•
Companies that revaluation its assets is only 39.4% of the sample studied, or
128 companies, which dominate the financial sector (38 companies). This
study also shows that 55% of companies carry out revaluation for the majority
of fixed assets or 71 companies.
Type of revaluation of the most widely used by the company is the revaluation
for accounting purposes, with a percentage of 37.5% or 48 companies.
The study also proves that there are two significant factors that influence the
company's decision to revalue the company's assets, namely fixed asset
intensity and size of the company but leverage and decreased cash flow
operating activities were not significant.
Implication
•
The accounting standard was considered by company when decide to follow
the new tax regulation, so DJP must consider accounting standard when
produce or revise the tax regulation.
•
Revaluation will decrease of tax payment in the future 4-20 year, because of
deductible depreciation expense of revaluation assets.
•
30
THANK YOU
31