Modelling the accruals process and assessing unexpected accruals*
Modelling the accruals process and assessing unexpected accruals*
Modelling the accruals process and assessing unexpected accruals*
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
Appendix 1: Derivation of Normal Accruals Model<br />
Starting with <strong>the</strong> expression (3) <strong>and</strong> rewriting income <strong>and</strong> cash flow interchangeably (see section<br />
3.1.1 for discussion), one yields <strong>the</strong> following<br />
where<br />
<br />
titit t <br />
T<br />
u, t u, t u, t u, t i u, t i<br />
TACC CNI CNI CF CF <br />
<br />
Adding <strong>and</strong> deducting<br />
i1<br />
T<br />
u, t u, t u, tiu, ti CNI tiCNItiCNItCNIt <br />
<br />
i1<br />
T<br />
t t u, t ti u, ti ti u, ti d tiatiCNIat CNI dt CNI <br />
<br />
<br />
i1<br />
T<br />
<br />
<br />
<br />
t u, t ti u, ti ti u,<br />
ti t u, t<br />
at i CNI at CNI dt CNI<br />
dtiCNI <br />
i1<br />
a CNI CNI , a CNI CNI<br />
t u, t u, t<br />
titi t u, t u, t<br />
titi ti u, ti u, ti t t<br />
d CNI CNI , d CNI CNI<br />
a CNI ,<br />
t u, t1<br />
ti above equations yields <strong>the</strong> following:<br />
TACC<br />
ut ,<br />
<br />
T<br />
<br />
i1<br />
tiu, t1<br />
t<br />
ti u, ti u, ti t t<br />
t u, t1<br />
a CNI , d CNI , <strong>and</strong><br />
t<br />
ti <br />
u, t<br />
<br />
ti t <br />
u, ti t<br />
ti <br />
u, t1 <br />
t<br />
ti <br />
u, t1<br />
<br />
ti at u, t1 CNI<br />
ti at u, t1<br />
CNI <br />
ti d t<br />
u, ti CNI<br />
t<br />
dt i u, t<br />
CNI t d ti u, t1 CNI<br />
t<br />
dt i<br />
u, t1<br />
CNI <br />
ti d t<br />
u, t1 CNI<br />
ti dt u, t1<br />
CNI <br />
aCNIaCNIaCNIaCNI <br />
<br />
<br />
<br />
Rearranging <strong>the</strong> equations yields,<br />
TACC<br />
ut ,<br />
<br />
T<br />
<br />
i1<br />
ti tiu, t1<br />
t<br />
45<br />
d CNI from <strong>the</strong><br />
,<br />
<br />
, 1 <br />
, 1 <br />
, 1 <br />
, <br />
, 1 <br />
, <br />
, 1 <br />
, <br />
<br />
, 1<br />
<br />
t u t u t t t i u t t i u t u t i<br />
atiCNICNIatiatCNIatCNICNI <br />
<br />
t u t u t t i t u t t i u t i u t<br />
dtiCNICNIdtdtiCNIdtCNICNI <br />
T T<br />
T<br />
t u, t u, t1 t ti u, t1<br />
ti u, t1 u, ti atiCNICNIatiatCNIatCNICNI <br />
i1 i1<br />
<br />
<br />
T T T<br />
t u, t1 u, t ti t u, t1 ti u, ti u, t1<br />
d tiCNICNIdtdtiCNIdtCNICNI i1 i1 i1<br />
<br />
i1
Change language