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An asset may be recognized as long as the reporting entity controls the rights (economic resource) the asset represents. The essential characteristic of control is the ability to benefit from the asset and prevent other entities from doing likewise.
Revenues from rendering services are recognized when services are completed and billed. Revenue from permission to use company's assets is recognized as time passes or as assets are used. Revenue from selling an asset other than inventory is recognized at the point of sale, when it takes place.
It is recognized only through an acquisition; it cannot be self-created. It is classified as an intangible asset on the balance sheet, since it can neither be seen nor touched. Under U.S. GAAP and IFRS, goodwill is never amortized, because it is considered to have an indefinite useful life.
A deferred expense (also known as a prepaid expense or prepayment) is an asset representing costs that have been paid but not yet recognized as expenses according to the matching principle. For example, when accounting periods are monthly, an 11/12 portion of an annually paid insurance cost is recorded as prepaid expenses.
The current asset formula includes the total sum of all current assets. Businesses can use this formula to assess their ability to cover current liabilities and remain financially solvent if ...
That is, the mark-down in value of the asset should be recognised as an expense in the income statement every accounting period throughout the asset's useful life. [1] The useful life of the asset is determined by taking into account expected usage, physical wear and tear, technical or commercial obsolescence arising from changes in production ...
IAS 37 establishes the definition of a provision as a "liability of uncertain timing or amount", and requires that all the following conditions be fulfilled before a provision can be recognized: the entity currently has a liability as a result of a past event; an outflow of resources is likely to be needed to settle the liability; and
The FASB Accounting Standards Codification is the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. In addition to the SEC's rules and interpretive ...