How Goodwill is an asset?
If we look for the answer to the question that why goodwill is an asset, then there is no specific explanation given in two of the renowned accounting frameworks i.e. IFRSs and US GAAPs. Although, the term goodwill has been defined and accounting treatment of goodwill has been under heavy discussion but not much is […]
What is the difference between Purchase ledger and Purchase account?
Quite a basic question in fact. A lot of students realize about these concepts as soon as they start studying Auditing especially when they have to apply different audit procedures where these basic concepts play pivitol role and thus we cannot escape them. To begin with, we need to clear one misconception that LEDGER is […]
What are the limitations of Balance Sheet or Statement of Financial Position?
Statement of financial position or Balance sheet is the essential part of the complete set of financial statements. It is also one of the most sort after source of information for the users of financial statement for decision making purposes. It provides an insight into the financial status of the entity and can also provide […]
Is ‘Cost of goods sold’ a Product cost or a Period cost?
Before we discuss under what heading should we classify cost of goods sold, let’s first of all clear out our minds for the terms inventoriable costs and period costs with a quick review. You can the answer on difference between period costs and product costs in good detail here. Inventoriable costs (Product cost) or Product […]
What is accelerated depreciation method?
i-ask! | Have a question? Ask Tutor! What is meant by accelerated depreciation method? When such method is used and how many types are there for this method? And what is the position of accounting standards on such depreciation method? As the name suggests, the accelerated depreciation method accelerates the the recognition of depreciation […]
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 […]
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. […]
What are the fundamental principles for the preparation and presentation of financial statements?
Although the accounting treatments and provisions regarding presentations of different important transactions in the financial statements is dealt separate accounting standards. However, in the absence of any specific guidance, provisions of IASB Framework and IAS 1 provides overall guidance for preparation and presentation of financial statements. Before we discuss both documents lets clear out few […]
What are the important Qualitative characteristics of Financial Statements?
As we understand that different users require financial information for assistance in their economic decisions. Entities publish financial statements so that users can get their information needs fulfilled. The dependence of users’ economic decision on financial statements is crucial and if the financial information is not accurate or is not true and fair then users […]
What is the objective of Financial Statements?
The basic objective of any financial statement is to fulfill information needs of the intended users. However, there are different kinds of financial statements for different purposes. Broadly we can divide the financial statements in two different types: General Purpose Financial Statements Special Purpose Financial Statements As said earlier that the basic objective of every […]
