What is Negative goodwill and its accounting treatment?

Goodwill has been defined under IFRS 3 as following: An asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised. On analysing the...

How to account for change in residual value of fixed asset?

International Accounting Standard (IAS) 16 recognizes that residual value of asset may increase or decrease as a result of revaluations or future assessments of non-current asset. IAS 16 recognizes such change as a change...

What are the Fundamental accounting Assumptions underlying Financial Statements?

Fundamental assumptions, basic assumptions or fundamental accounting assumptions mean the accounting concepts that have been considered and followed while recording financial information. As information needs are different from person to person, entity to entity...

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...

What is revenue recognition and accounting treatment for goods sold or sent on sale...

Before we discuss the recognition principle and accounting treatment for sales under sale or return conditions. First lets have ourselves clear about what is meant by sale or return? Under sale or return, the goods...

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...

What is the difference between a Fair presentation framework and a Compliance framework?

Financial statements are prepared to fulfill information needs of its users. In order to cater the needs at best a certain financial reporting framework is used considering the jurisdiction in which the entity and/or...

What is meant by Carriage inwards and its accounting treatment?

Carriage inwards, transportation inwards, transport inwards, freight inwards or shipping cost are the cost borne by the buyer of the goods for moving the goods from supplier's place to his own place (usually raw...

What is ABC Analysis?

ABC analysis is one of the known inventory classification methods available in which inventory is categorized in three classes A, B and C where A being most important, B being important and C being...

Is Warranty cost capitalized or included in cost of the asset?

Warranty in simple words is a promise by the manufacturer to make good of your loss under certain conditions. This helps win customers' confidence and is one of the major consideration in buyer's purchase...