This category covers various aspects of financial accounting such as basic accounting, principle of accounting, accounting treatment as well as financial statements or financial reporting.
Definition of Deferred Consideration Deferred Consideration can be defined as a part of the purchase price that is payable by the buyer in the future, once the deal has been closed. The purchase price is mostly negotiated on the basis of the fair market value, and the mutual understanding between the purchaser, as well as …
Tenant Improvements can be described as the renovations or customizations that are made to a said property in order to benefit the tenant. However, the said alterations are only meant to be applicable to improvements in the rented space, like the office. They do not include building improvements that are made outside of the given …
Return on assets is one of the most crucial matrices to assess profitability and business operations performance. If the business efficiently manages its operations and utilizes assets, the return on assets is expected to be higher and vice versa. Detailed understanding Return on assets is calculated by dividing net income by the total assets. The …
Periodicity assumption states that a business can report its financial information in any designated period of time. It means that they can divide the activities of a business into an artificial period. That’s the reason why the periodicity assumption is preferred while presenting financial information. This assumption allows the companies to prepare their financial statements …
What is the periodicity assumption in accounting? Read More »
Accounting has evolved to be complex for providing comprehensive insights to the user of financial statements. The objective of improving financial reporting is to enhance the true representation of the financial and operational information presented in the financial statement. So, the process to enhance user experience requires the business accountant to present financial information that …
Accrued vacations are entitled absence payments to an employee from the employer when certain conditions are fulfilled. An employer may adopt a certain compensation policy that includes compensated absence. ASC 710 provides guidelines on the accounting treatment of compensated vacations and the accrued liability for an employer. Let us discuss how an employer can account …
Joint ventures are commonly known as equal investments in a new entity. However, the definition and accounting treatment of a joint venture does not require equal investment and ownership stakes in the joint entity. Joint ventures can be in the form of partnerships, for projects, or for any other investment purposes. The accounting for joint …
Companies involved in the manufacturing process have assets that assist in this process. Usually, these assets include machinery, which helps them alter raw materials into finished goods. Companies acquire machines through capital investments, usually an upfront payment to a supplier. In some cases, they may also feature leased machinery. Regardless of the source, companies need …
A lease is an agreement in which a lessor allows a lessee to use their assets. In this process, the lessor owns the asset and grants a right to use the underlying asset. The lessee, in exchange, pays them for this right. Some several other terms and conditions dictate these contracts. In essence, however, most …
When acquiring an asset, companies have several options to finance it. The most common form of finance is the company’s internal resources. Usually, companies have surplus assets that they can invest into new acquisitions. Most companies track these resources to ensure they can acquire new assets based on them. These assets generate from the company …
