Accounting Articles

February 20, 2015

Valuation of fixed assets has always been a contradictory issue for standards setters. Accounting for fixed assets at historical costs decreases the likelihood of manipulation, while accounting for fixed assets at fair values provides more relevant information to users of financial statements. In this article we will review US GAAP rules about initial measurement and subsequent accounting for fixed assets, and compare them with the IFRS requirements.

February 12, 2015

These days companies manufacture a lot of product varieties. Each product requires multiple parts to be created. Manufacturers can produce such parts themselves or they can buy them. Of course, the choice of producing parts or buying them includes various aspects and one of them is cost. In this article, we will discuss make or buy decisions.

January 29, 2015

A conversion feature can add a lot of value for potential bondholders because the investor could take advantage of future company growth. In this article, we’ll discuss the basics of recording an issuance of convertible bonds and transferring the bond liability to equity accounts when the bonds are converted.

January 22, 2015

Normal business relationships among a parent and subsidiaries cause intercompany transactions that need to be recognized in the separate financial statements of these entities. When the time comes for periodic reporting, the parties engage in reconciling their accounts. In this article we will review the reasons why intercompany reconciliations are needed and look at reconciliation procedures.

January 17, 2015

Most costs capitalized to manufactured or constructed assets are easy to differentiate from costs that should be immediately expensed. In this article, however, we’ll cover a more obscure cost that should be allocated to constructed fixed assets – interest on the debt used to finance the construction project.

January 11, 2015

In this article, we’ll cover the basics of internal controls. Internal controls represent a concept that is absolutely fundamental to any well-managed business. They are also one of the foundations of financial statement audits.

December 29, 2014

You have probably heard about economies of scale, but may not be sure how they work. In this article, we will discuss when economies of scale take place.

December 18, 2014

Warrants can be used as sweeteners by companies issuing debt securities or preferred stock to entice potential creditors/investors. This article covers the basics of warrants.

December 11, 2014

The amount of intangible assets in financial statements within software, pharmaceutical, sport and other industries has grown significantly in recent years making capitalization and valuation of intangible assets a topical issue. The article below deals with recognition, measurement and valuation of intangible assets.

December 3, 2014

Companies pay taxes that are determined by specific country laws and regulations. However, taxable profits are rarely the same as financial accounting profits which gives rise to deferred taxes in financial statements. This article describes the basic rules of determining deferred tax assets and liabilities and their presentation in the cash flow statement.

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Accounting Articles
Accounting Articles include guides and answers. Accounting guides explain application of accounting principles in practice. Great assistance if you are looking for real-life accounting situations. Accounting answers explain particular accounting topics suggested by our website users. Great to find quick answers for specific topics.