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Long- debt refers to obligations listed on the balance sheet, backed by formal contract, expected to be paid with the use of assets listed as non-current on the balance sheet. A LIFO liquidation occurs when companies that use the LIFO cost flow assumption have sales that exceed production. LIFO users must pay close attention to inventory levels because when inventory liquidations occur, abnormally high profits can be reported. This is due to matching inventory having old costs against current revenues.
How does amortization affect financial statements?
Amortization is a non-cash expense, which means that it does not require a cash outflow, but it does reduce the asset's value. Therefore, since the expense has already been incurred, the amortization does not affect the company's liquidity. However, the amortization expense is recorded in the income statement.
In calculating depreciation expense for the year ended December 31, 2018, X-it’s accountant will assume that the truck was purchased on ____. Extraordinary repairs to long-lived assets are ____ because they are large expenditures and increase the useful life of the asset. The entry to record the purchase of $10,000 of equipment by signing an $8,000 note and paying the rest with cash is recorded with a ____.
Calculating Account Balances
The http://macdonaldwright.com/?portfolio=baltic of real estate for real estate is an exchange of like-kind property. If you acquire property in a like-kind exchange, the basis of the property you receive is generally the same as the basis of the property you transferred. The like-kind exchange rules also apply to property exchanges that involve three- and four-party transactions.
- With a short expected duration, such as days or months, it is probably best and most efficient to expense the cost through the income statement and not count the item as an asset at all.
- The journal entry to record amortization expense includes a ________ to amortization expense.
- Fully diluted earnings per share, which is a required disclosure under generally accepted accounting principles , reflects the dilutive effects of these kinds of securities.
- Low-income housing includes all of the following types of residential rental property.
- The buyer and seller may enter into a written agreement as to the allocation of any consideration or the fair market value of any of the assets.
- These disclosures help the reader to better assess the uncertainties inherent in the market value estimates.
- The presence of unsecured debt on the balance sheet of a company, therefore, is often a signal of financial strength; that company’s creditors apparently have not required that the debt be secured by the company’s assets.
Salvage value refers to the dollar value of a long-lived asset at the completion of its useful life. Salvage values must be estimated before long-lived assets are placed into service so that the depreciable base can be depreciated, or amortized, over the estimated useful life. Estimating salvage values is extremely subjective, so many companies assume them to be zero. Replacement cost is the current price a company would have to pay in the input market to replace an existing asset while maintaining operations at the present level.
Everything You Need To Master Financial Modeling
http://www.proplay.ru/forums/wc/6560/ cycle is the time it takes, in general, for a company to begin with cash, convert the cash to inventory , sell the inventory , and receive cash payment. Net realizable value is the net cash amount expected from the sale of an item, usually equal to the selling price of the item less the cost to complete and sell it. Net operating income is equal to the operating revenues minus operating expenses. Net credit sales are equal to gross sales on account less an estimate of sales returns and allowances. Market share is the proportion of the total market for a particular good or service held by a company.
The balance sheet is a statement of this equation; transactions are recorded on the financial statements in a way that maintains the equality of this equation. Firms capitalize (i.e., value and display as assets on the balance sheet) the costs of acquiring identifiable intangible assets. The value of such assets can be ascertained from similar transactions made elsewhere. The acquirer must consider the future benefits of the intangible asset to be at least equal to the price paid. Intangible assets are listed as identifiable if the asset can be separated from the firm and sold, leased, licensed, or rented. Examples of separable intangible assets include patents and customer lists.
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The declining-balance depreciation method assigns _____ depreciation expense to the early years of asset ownership. Land improvements reported on a company’s balance sheet might include _____. The formula for the fixed asset turnover ratio equals net ____ divided by average net fixed assets. On January 11, 2018, Ace Electronics bought a new cash register for $2,500.
