The tax year is generally from April 6 to April 5, but cannot exceed a 12-month period. Corporate profit from trade or business, capital gains and investment is taxed. The accrual basis is used with percentage of contract being more widely used than the installment method due to specific circumstance restrictions. LIFO is not permitted for inventory valuation. Provision for bad debt accounts are not allowed, and write-offs are taken as they occur.
Depreciation is a percentage of value based on year of purchase.
The accounting period cannot exceed 12 months, but has no other stipulations. Commonly the financial and tax periods are the same. Historical cost is the most prevalent method of valuing assets at the present time. If the asset is valued at higher than cost, the additional amount is listed on the balance sheet as a cost unable to be allocated. FIFO or Average Cost methods are used for valuing inventory, which includes full costing for indirect manufacturing and other overhead.