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under that law (and those principles), indirect costs (including
overhead) are often required to be capitalized. (3) To the
extent the majority distinguishes directly related from
indirectly related costs, it seems to be saying that fixed costs
are period costs because they are only indirectly related to any
capital expenditure. That is also not an accurate statement of
current law (and accounting principles) that often require
absorption or full costing methods of accounting for fixed costs.
(4) The majority has ignored the proper mode of analysis, which
is to determine whether ACC’s accounting for overhead clearly
reflects its income.
II. Agreement of the Parties
The parties agree that the amounts identified by the
majority as ACC’s installment contract expenditures were
“related” to ACC’s credit analysis activities. Apparently, they
agree that overhead was related to ACC’s credit analysis
activities because items such as the telephone and computers
facilitated ACC’s obtaining of credit reports and screening of
credit histories. In turn, the credit reports and case histories
assisted ACC’s employees in determining that any particular
installment contract presented a sufficiently low expectation of
nonperformance to justify its purchase. ACC treated the
installment contract expenditures (including overhead)
disparately for financial accounting and Federal income tax
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