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Depreciation allocates the cost of an asset over its expected lifespan according to the matching principle. For example, if a machine is purchased for $100,000, has a lifespan of 10 years, and produces the same amount of goods each year, then $10,000 of the cost (i.e., $100,000 divided by 10 years) is allocated to each year.
In accounting, the revenue recognition principle states that revenues are earned and recognized when they are realized or realizable, no matter when cash is received. It is a cornerstone of accrual accounting together with the matching principle. Together, they determine the accounting period in which revenues and expenses are recognized. [1]
Realization is a trigger for calculating income taxation. It is one of the three principles for defining income under the seminal case in this area of tax law, Commissioner v. Glenshaw Glass Co. [ 1 ] In that case, the Supreme Court interpreted a statute under the tax code and determined that income generally means "undeniable accessions to ...
Simple example If an investor owns 10 shares of a stock purchased for $4 per share, and that stock now trades at $6, the "mark-to-market" value of the shares is equal to (10 shares * $6), or $60, whereas the book value might (depending on the accounting principles used) equal only $40.
Eisner v. Macomber, 252 U.S. 189 (1920), was a tax case before the United States Supreme Court that is notable for the following holdings: . A pro rata stock dividend where a shareholder received no actual cash or other property and retained the same proportionate share of ownership of the corporation as was held prior to the dividend by the shareholder was not income to the shareholder under ...
An order matching system or simply matching system is an electronic system that matches buy and sell orders for a stock market, commodity market or other financial exchanges. The order matching system is the core of all electronic exchanges and are used to execute orders from participants in the exchange.
Marshall Armstrong, then-president of the American Institute of Certified Public Accountants (AICPA), appointed a group of seven men (collectively called the Wheat Committee after its head Francis Wheat) in 1971 to examine the organization and operation of the Accounting Principles Board, in order to determine what adjustments were needed to ...
Best execution refers to the duty of an investment services firm (such as a stock broker) executing orders on behalf of customers to ensure the best execution possible for their customers' orders. Some of the factors the broker must consider when seeking best execution of their customers' orders include: the opportunity to get a better price ...