Is change in inventory valuation method is a change in accounting estimate or an...
Before we establish whether it is a change in accounting policy or a change in accounting estimate, lets understand what constitutes a change in accounting policy and accounting estimate.
According to IAS 8 a change...
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...
How interest and dividends are disclosed in statement of cash flows?
This often confuse students who are studying Statement of Cash Flows that what is the correct way of disclosing or presenting interest paid or received and dividends paid or received during the period. Many...
When training costs can be capitalized?
It is correct that International Accounting Standards and especially IAS 16 Property, Plant and Equipment has specifically ruled out the capitalization of any expenditure incurred on training costs. You can read in more detail...
What is a non-cash expense?
Non-cash expenses are such expenses that do not involve real cash outlay or against which no real cash outflow has taken place at least in the period in which such expense has been reported....
Is change in depreciation method a change in accounting policy or accounting estimate?
Depreciation method helps accountants in aligning the recognition of cost with the benefits rendered by asset as per the requirement of IAS 16 that requires rate of depreciation rate to match the rate at...
How a liability paid in kind or by issuing shares is disclosed in statement...
Most of the time entities pay out their liabilities, whether short term or long term, in cash. And by cash it means either in hard cash or by issuing cheque or using cash equivalents.
Sometime...
What is Financial Instrument?
Financial instrument in essence is simply a contract that will ultimately result in financial asset in the hands of one party and corresponding financial liability in the hands of another party to the same contract.
For...
What is the difference between Exceptional item and Extraordinary item?
So far International Accounting Standards (IASs) and International Financial Reporting Standards (IFRSs) have not defined such terminologies. However, apparently these terms seem to have different treatments according to accounting standards especially IAS 1 in...
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...