Hasaan Fazal
How to know that a lease is a Finance lease or Operating lease?
The core principle to distinguish or differentiate finance lease agreement from operating lease agreement is that if substantial risks and rewards incidental to the ownership of an asset are transferred under a lease agreement to the lessee (person acquiring the asset for use) from the lessor (the owner of the asset) then it is a […]
What is the difference between Finance lease and Operating lease?
According to IAS 17 two types of leases are identified namely Finance lease and Operating lease. The distinction between the two primarily resulted from the implications of one of the important accounting concept Substance over form. Finance lease is a lease agreement in which substantially all the risks and rewards incidental to ownership of an […]
Can we capitalize Tax amounts?
According to IAS 16 the purchase price of the asset includes the amount of non-refundable taxes i.e. such taxes which cannot be claimed back are capitalized and are included in the cost of the asset at the time of purchase. For example, when the asset is purchased or imported then buyer/importer is required to pay […]
Why Training Costs are not capitalized as cost of the asset?
First of all not every directly attributable cost can amount to capitalization as cost of the asset. IAS 16 requires more than just a cost to be directly attributable before it qualifies for capitalization as cost of the asset or to be included in the carrying amount of the non-current asset or fixed asset. According […]
What is the difference between Assurance and Attestation in auditing?
Putting it in few words then assurance engagement is much broader term and concept as compared to attestation engagement. It will not be wrong if we say that all attestation engagements are assurance engagements but not every assurance engagement is attestation engagement. Assurance engagement is an engagement undertaken by the practitioner (e.g. auditor, reviewer etc.) […]
Why LIFO is not permissible under IFRS?
After the revision of IAS 2 Inventories in 2003, LIFO was explicitly prohibited to be used by the entities following International Accounting Standards to prepare and present financial statements. Before this revision LIFO was available as allowed alternative i.e. an option if company wishes to use the inventory valuation method other than the preferred method. […]
What is the difference between Faithful representation and Fair presentation?
IASB framework provides conceptual guidance regarding preparation and presentation of financial statements whereas IAS 1 sets out the principles and rules for preparation and presentation of financial statements. So the difference between these two documents must be clear as framework does not amount to standard and is separate from International Accounting Standards. The provisions stated […]
What is Grouping and Marshalling in financial statements?
While preparing financial statements, especially Statement of Financial Position (SoFP) also, known as balance sheet, two presentation concepts are applied which are termed as Grouping and Marshalling. Grouping means presenting similar items together as one figure i.e. by combining them at one place and presenting as a single item on the face of financial statement. […]
TOP 20 QnAs of the month - May 2011
i-ask! | Have a question? Ask Tutor! So we approached the end of May 2011 with many exciting and good questions answered. We are thankful to students and visitors who asked nice and thought provoking questions which are sure will be of great help to other students as well. Here are the TOP 20 QnAs […]
What is Common Size Income Statement?
Common size income statement is an income statement in which each item is reported as a percentage of revenue (also known as turnover or sales).This technique i.e. to express quantities as a percentage of a base figure is called common-size analysis. This technique i.e. common-size analysis is also known as vertical analysis. Common size income […]