Why impairment of goodwill is not reversed?
First of all we must be clear that goodwill is an intangible asset that entities can recognize in their financial statements but only such goodwill that is acquired in business combination. Internal goodwill or in-house goodwill is not recognized as entity’s assets in books of accounts. One more thing to understand is that goodwill is […]
What is meant by Economic benefits and how they flow to the entity?
It is easy to understand that entities around the world hold different sets of machinery, plant, equipment, building, land and other kinds of assets through which it offers products or services to its customers and in return earn income and generate cash. Products are made through different machines and the value these machines and equipment add […]
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 […]
Why amortisation of goodwill is not permissible?
Before IFRS 3 was introduced, entities were allowed to amortize goodwill. However, after it was introduced back in 2004-2005, amortization of goodwill was strictly prohibited and entities were required to follow impairment regime. As a result, entities are required to test purchased goodwill for impairment loss on annual basis. Getting deeper in accounting history, we […]
What is Depreciation?
Depreciation basically signifies a steady decline in the value of asset. Generally it is studied in terms of the period of time that such decline in the value took place. Therefore, it is also described as the value lost by the asset over useful life of the asset i.e.the period of time for which it […]
What is the difference between General Journal and General Ledger?
Journals, also known as Books of Prime Entry or Books of Original Entry are the first books of accounting in which transactions are recorded in a chronological order following certain rules and regulations of accounting that helps summarizing the information in a way that preserves the value and completeness of financial information. The term Entry […]
What are different causes of Depreciation?
Here are some of the reasons or causes of depreciation: Physical loss Any damaging change in the physical features of the asset or in the productivity, efficiency or effectiveness of the asset either because of the usage, perishability, or any mishap will result in the decrease in the value of asset and subsequent disposal will […]
What type of accounts are maintained under Purchases ledger?
i-ask! | Have a question? Ask Tutor! What type of accounts are maintained under Purchases ledger? What entries are posted in purchase ledger? Also what is the difference between purchases ledger and purchases account? First things first, we need to understand and be very clear that ledgers and accounts are two different things and are […]
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 is french straight line method of depreciation?
French straight line depreciation method is not completely a new method to calculate depreciation. Rather it is more of a derivation or extended version of usual straight line method accounting students learn in depreciation topic. And many students learn french straight line method under the name of straight line method. But they are not completely the […]
