What is complex asset or separate component asset?
An asset that consistes of different components and each component is significant in relation to the cost of the asset then such assets are called complex assets or separate components asset.
This becomes an important...
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...
What is Retail Price method of inventory valuation?
Inventory is an important asset entity holds and its valuation is critical as it not only affects figures in statement of financial position but also profit calculation. There are several methods to value year...
What is Income approach to fixed asset revaluation?
After initial recognition at cost if the carrying value of an item (of property, plant and equipment) is significantly different from the value measured on fair value basis then revaluation of asset is required....
What is meant by Depreciation?
Depreciation simply means a steady decrease in the value of asset. Often it is studied in relation to the time period over which such decrease in the value has occurred. Therefore, often it is also...
What is Special purpose framework of preparing Financial Statements?
Generally financial statements that are made available to public are prepared using such accounting and reporting framework that caters the general decision making needs of general users and thus called general purpose financial reporting...
What is NIFO inventory valuation method?
NIFO - Next in, First out is an inventory valuation technique in which issues to the production hall are valued at the current market price i.e. current cost or replacement cost instead of the...
What is Inventory?
Inventory is simply such asset that business has bought and holds with an intention to be sold in the normal course of the business i.e. it is the business of the entity to buy...
What is the accounting treatment of Preference shares and dividend in financial statements?
To determine the accounting treatment of preference shares and dividend on such shares, first you have to identify if preference shares are redeemable or irredeemable.
Accounting treatment for redeemable preference shares
If preference shares are redeemable...
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...