The bank capital is the sum of resources a bank can use against insolvency risks. Its assets include share capital, retained earnings, and loans issued. The bank capital to asset ratio is an important measure to understand the bank’s financial stability. Let us discuss the bank capital to asset ratio, how it is calculated, and …
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Capital assets are any significant investments held by an individual or a business. As long as these assets are held by the owners, they are not subject to any taxes. Capital assets owe taxes with capital gains. The tax rates are significantly lower than ordinary income tax rates. However, taxpayers must be mindful of certain …
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The accounting treatment for the issuance of new shares depends on the market value and the form of consideration received. Commonly, companies issue new common stocks to raise additional capital from the market. Companies without a trading stock value can also issue new shares to specific investors. Let us discuss the accounting treatment of issuance …
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In a common notion, a bank account title represents the account owners of a bank account. However, the legal owners and the bank account title can differ in many cases. A bank account title has several uses, which is important for the account holders. It has several legal and compliance uses as well. Let us …
Office supplies are items that a business uses in routine tasks. Usually, businesses account for supplies as expenses. However, a business can also record them as assets. A business can categorize office supplies, expenses, and equipment accordingly. The accounting treatment for them will also differ. Let us discuss the accounting treatment and asset classification of …
Inheritance taxes are applicable on the bequest that a beneficiary receives. The tax rules and rates can vary from one jurisdiction to another. For example, in the US, there are no federal inheritance taxes. Most states have also repealed inheritance taxes in the US. There are only six states that have inheritance taxes. However, you …
Capital assets are the backbone of a business. These assets provide financial strength and opportunities to generate revenues. Capital asset management is critical for any business. It helps a business stay competitive and reduce its asset maintenance costs. That in turn can improve operational efficiency and profits of the business. Let us discuss some key …
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Businesses need to charge depreciation for accounting and compliance purposes. It is a method to allocate the costs of a fixed asset over several accounting periods. Depreciation helps a business in several ways including asset valuation, tax benefits, and cost allocations. A business can use any depreciation method. However, tax regulatory authorities require following a …
Generally, marketable securities are classified as current assets in the balance sheet of the business. The reason is that these are the financial instruments that can be converted into cash on short notice. These securities are highly liquid and mature in less than a year. Further, there is no massive impact on the selling/buying prices …
Mostly, intangible assets have a life of more than a year. So, these assets are not classified as current assets. Instead, these assets are classified as non-current assets and amortized over the useful life. Examples of intangible assets include software, patents, and goodwill that do not seem to be depleted within twelve months. Hence, these …
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