transfers. The investor and investee make reciprocal entries to defer and realize inventory profits. No adjustments are necessary. Acker Inc. bought 40% of Howell Co. on January 1, 2012 for $576,000. The equity method of accounting was used. The book value and fair value of the net assets of Howell on that date were $1,440,000. Acker began supplying inventory to Howell as follows: Howell reported net income of $100,000 in 2012 and $120,000 in 2013 while paying $40,000 in dividends each
Words: 1014 - Pages: 5
é The Effects of Mandatory IFRS Adoption in the EU: A Review of Empirical Research October 2014 Information for Better Markets An initiative from the ICAEW Financial Reporting Faculty The Effects of Mandatory IFRS Adoption in the EU: A Review of Empirical Research forms part of the Information for Better Markets thought leadership programme of ICAEW’s Financial Reporting Faculty. ICAEW operates under a Royal Charter, working in the public interest. As a world leading professional accountancy
Words: 80078 - Pages: 321
necessarily representing the actual fair value of an asset, which is likely to diverge from its purchase cost over time. The historical cost concept is clarified by the cost principle, which states that you should only record an asset, liability, or equity investment at its original acquisition cost. Current replacement cost: Is the method of reporting assets /liabilities according to the cost of replacing them at current market price. This is the opposite of historical accounting. This cost can change depending
Words: 700 - Pages: 3
liabilities he is willing to assume .The Company buys stock in a company that have no liabilities left. If the price of an asset exceeds the aggregate tax, the buyer is given a price step-up basis in the assets so as it is the same to the purchase value. 2. Buying assets in a company, the buyer escapes from the problems presented by minor shareholders who refuse to sell the shares they own. 3. Buying a business through asset acquisition is easier and is not complicated from a perspective of
Words: 607 - Pages: 3
1. When talking about accounting methods, which of the following statements is false? a. The cash and accrual methods are the principal accounting methods. b. Subject to approval by the Commissioner of the IRS, the use of unspecified accounting methods is permitted. c. Section 453 of the Internal Revenue Code permits the use of the “installment method.” d. The “matching” concept of accounting is useful in understanding the IRS permitted methods of accounting. e. All of the preceding statements
Words: 3380 - Pages: 14
This guidance addresses the concept of depreciation accounting and the various factors to consider in selecting the related periods and methods to be used in such accounting. 35-3 Depreciation expense in financial statements for an asset shall be determined based on the asset's useful life. 35-4 The cost of a productive facility is one of the costs of the services it renders during its useful economic life. Generally accepted accounting principles (GAAP) require that this cost be spread
Words: 1634 - Pages: 7
beachhead of accounting field. International Accounting Standards Board (IASB) little by little surpasses Financial Accounting Standards Board (FASB) in dominance over accounting framework. There are more than 100 countries have adopted or have permitted to use or have been converging with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), instead of following Generally Accepted Accounting Standards (GAAP) and Statements of Financial Accounting Standards
Words: 1568 - Pages: 7
passed to the lesee. Treatment in the United States Under US accounting standards, a finance (capital) lease is a lease which meets at least one of the following criteria: ownership of the asset is transferred to the lessee at the end of the lease term; the lease contains a bargain purchase option to buy the equipment at less than fair market value; the lease term equals or exceeds 75% of the asset's estimated useful life; the present value of the lease payments equals or exceeds 90% of the total
Words: 1191 - Pages: 5
aids in making economic decisions relating to the reporting entity. Also enables its users to measure and quantify the economic and financial aspects of an enterprise. Kothari and Barone (2006:23) believe that 'accounting is becoming increasingly globalized'. However, ‘current accounting practice does not meet the information needs of capital market in the 21st century ’(View Point, 2007:1). To meet the diversified needs and expectations of the users a single framework of financial reporting is essential
Words: 2766 - Pages: 12
CHAPTER 22 Accounting Changes and Error Analysis ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics 1. Differences between change in principle, change in estimate, change in entity, errors. Accounting changes: a. b. Comprehensive. Changes in estimate, changes in depreciation methods. Changes in accounting for long-term construction contracts. Change from FIFO to average cost. Change from FIFO to LIFO. Change from LIFO. Miscellaneous. 2, 11 8 1, 3, 4, 5, 8, 24 8, 14, 15, 17, 19 2, 18, 21 9, 16,
Words: 17623 - Pages: 71
