Before possessing an asset via purchase, especially a property, it is necessary to run an appraisal to determine its market value. This appraisal can be approached through three means: the income approach, the cost approach, and the sales comparison approach. 1) The Income Approach The income approach is an appraisal method that permits appraisers to […]
What Are The 3 Appraisal Approaches? All You Should Know Read More »
Introduction Dividends, whether cash dividends or stock dividends are not written down as an expense in the company’s financial statements. This is because they do not affect the profit in the income statement of the company. They are rather written down under the shareholder equity section of the company and hence affect the balance sheet.
Are Dividends an Expense or Revenue? (Explained) Read More »
Introduction The company buys fixed assets for long-term use. They are not sold for cash in the short term, which means they essentially last longer than 12 months. Such assets would include land, building, or equipment owned by a business. A misrepresentation of fixed assets can lead to an imbalance of the balance sheet on
What Is the Key Control for Fixed Asset? (Three Key Control You Should Know) Read More »
Sometimes the business has to bear significant expenses in the process to raise the finance. The expenses may include the appraisal fees, registration charges, accounting fees, regulator charges, loan marketing expenses, regulator fees, and all other related expenses. If the fees for obtaining the loan are not material, the business may charge in the current
Do Loan Fees Have To Be Amortized? (All You Need to Know) Read More »
Definition As part of an accounting procedure, amortization is the process of lowering the book value of an asset or loan over a finite period of time. During the amortization of a loan, payments are spread out over a period of time. This concept is similar to depreciation and amortization that reduces book value with
How Do We Calculate Amortized Loan Cost? Definition, Explanation, and More Read More »
Definition An annuity is an arrangement where parties agree to pay/receive the fixed amount after a fixed time. In other words, it’s a system where a series of equal payments is made at equal intervals for a specific period under consideration. The payment frequency of an annuity may vary depending on the contract between parties,
What is An Annuity in Accounting? (Definition, Explanation, Example, and More) Read More »
Analytical procedures help an auditor to critically assess if presented financial information has a plausible/logical relationship with other financial and non-financial information. These procedures are usually performed at the audit’s planning, execution, and finalization stage to assign overall risk to the audit engagement, gain audit evidence, and ensure numbers align with the auditor’s understanding. For
Analytical Procedures in Auditing: What Is It and Why Is It Important Read More »
What is meant by Amortized Cost? Amortized Cost can be defined as the amount at which certain assets and liabilities are measured at initial cost, adjusted for principal repayments. They comprise of a number of things, which mainly include the following: Initial Recognition Amount Subsequent Recognition of Interest Income and Expense Repayments Credit Losses Amortization
Amortized Cost and Effective Interest Rate: What are They? Read More »
Definition of Amortization of Bond Discount? Amortization can be defined as a process that is carried out to reduce the cost base of a given bond for each subsequent period in order to reflect the nearing maturity date of the relevant financial statement. The amortization process is done at the face value of the bond.
Amortization of Bond Discount: Definition, Calculation, and Formula Read More »
Definition of Altman Z-Score The Altman Z-Score is used to calculate the probability and likelihood of a business being bankrupt in the coming two years. From an investor’s perspective, Altman Z-Score reflects the relative safety of the given investment of the company. The Altman Z-Score is calculated using components in the financial statements of the
Altman Z-Score – Definition, Formula, Calculation, And More Read More »
