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In terms of short-term notes receivable, it is measured at face value. [2] The initial measurement of long-term notes receivable depends on whether the notes are interest-bearing or noninterest-bearing. [2] Interest-bearing notes have a specified interest rate payable on top of their face value.
Current ratio is generally used to estimate company's liquidity by "deriving the proportion of current assets available to cover current liabilities". The main idea behind this concept is to decide whether current assets which also include cash and cash equivalents are available pay off its short term liabilities (taxes, notes payable, etc.)
If you bought a non-current asset for $10,000 and have written off $3,000 for depreciation, the current valuation of that non-current asset is $7,000. Examples of Non-Current Assets in Major Companies
Assets (current) Liabilities and Owners' Equity Cash $6,600 Liabilities; Accounts Receivable $6,200 Notes Payable: $5,000 Assets (fixed) Accounts Payable $25,000 Tools and equipment $25,000 Total liabilities: $30,000 Owners' equity; Capital Stock $7,000 Retained Earnings $800 Total owners' equity: $7,800 Total: $37,800: Total: $37,800
The current ratio divides current assets by current liabilities. For instance, Alphabet’s Q2 2024 balance sheet had $162.0 billion in current assets compared to $77.9 billion in current liabilities.
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.
Long-term liabilities, or non-current liabilities, are liabilities that are due beyond a year or the normal operation period of the company. [1] [better source needed] The normal operation period is the amount of time it takes for a company to turn inventory into cash. [2]
Key examples of current liabilities include accounts payable, which are generally due within 30 to 60 days, though in some cases payments may be delayed. Current liabilities also include the portion of long-term loans or other debt obligations that are due within the current fiscal year. [ 1 ]