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An asset's initial book value is its actual cash value or its acquisition cost. Cash assets are recorded or "booked" at actual cash value. Assets such as buildings, land and equipment are valued based on their acquisition cost, which includes the actual cash cost of the asset plus certain costs tied to the purchase of the asset, such as broker fees.
The carrying value is defined as the value of the asset appearing on the balance sheet. The recoverable amount is the higher of either the asset's future value [12] for the company or the amount it can be sold for, minus any transaction costs. [13] [14]
For some types of assets with readily available market values, standards require that the carrying value of an asset (or liability) be updated to the market price or some other estimate of value that approximates current value (fair value, also fair market value).
Cost of goods sold (COGS) is the carrying value of goods sold during a particular period.. Costs are associated with particular goods using one of the several formulas, including specific identification, first-in first-out (FIFO), or average cost.
Carrying cost also includes the opportunity cost of reduced responsiveness to customers' changing requirements, slowed introduction of improved items, and the inventory's value and direct expenses, since that money could be used for other purposes.
To get fair market value of assets, in case of sale-and-leaseback transaction. When the company intends to take a loan from banks or financial institutions by mortgaging its fixed assets. Proper revaluation of assets would enable the company to get a higher amount of loan. Sale of an individual asset or group of assets.
5. Excess Cash. Walking around with a fat wallet of cash feels good, but if you lose your wallet, the odds of keeping your green aren’t good. Besides, if you’re out and about and a potential ...
The cost of carry or carrying charge is the cost of holding a security or a physical commodity over a period of time. The carrying charge includes insurance , storage and interest on the invested funds as well as other incidental costs.