Search results
Results from the WOW.Com Content Network
An asset depreciation at 15% per year over 20 years [1] In accountancy, depreciation refers to two aspects of the same concept: first, an actual reduction in the fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wears, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are ...
Record this annually on the income statement and update the accumulated depreciation on the balance sheet. Depreciation is more than an accounting tool. It’s a strategic financial instrument ...
Contra-accounts are accounts with negative balances that offset other balance sheet accounts. Examples are accumulated depreciation (offset against fixed assets), and the allowance for bad debts (offset against accounts receivable). Deferred interest is also offset against receivables rather than being classified as a liability.
IAS 16 requires an entity to disclose in its financial statements for each class of property, plant and equipment: [1] the basis for measuring carrying amount; the depreciation method(s) used; the useful lives or depreciation rates; the gross carrying amount and accumulated depreciation and impairment losses
A balance sheet is often described as a "snapshot of a company's financial condition". [1] It is the summary of each and every financial statement of an organization. Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business's calendar year. [2]
A company's earnings before interest, taxes, depreciation, and amortization (commonly abbreviated EBITDA, [1] pronounced / ˈ iː b ɪ t d ɑː,-b ə-, ˈ ɛ-/ [2]) is a measure of a company's profitability of the operating business only, thus before any effects of indebtedness, state-mandated payments, and costs required to maintain its asset base.
Since the balance sheet is founded on the principles of the accounting equation, this equation can also be said to be responsible for estimating the net worth of an entire company. The fundamental components of the accounting equation include the calculation of both company holdings and company debts; thus, it allows owners to gauge the total ...
The balance sheet valuation for an asset is the asset's cost basis minus accumulated depreciation. [8] Similar bookkeeping transactions are used to record amortization and depletion. "Discount on notes payable" is a contra-liability account which decreases the balance sheet valuation of the liability.