Accounting Articles

April 11, 2015

Financial statements and other financial information may include uncertainties. Impact of such uncertainties may be assessed using sensitivity analysis. In this article, we will describe the nature of sensitivity analysis and how it can be performed.

April 5, 2015

History of accounting standards has had several interactions of rules related to accounting for goodwill. Goodwill is a premium paid for a company over its assets and liabilities. There are situations, however, when a buyer pays less than what the assets and liabilities of the company are worth. This creates a bargain purchase.

March 26, 2015

Efficient and ethical corporate governance and internal audit function became increasingly important for investors after Enron scandal in 2001. This article focuses on the nature of internal audit, shows differences with external audit and provides overview of main audit assignments.

March 14, 2015

Under US GAAP, the cash flow statement can be prepared using either an indirect or a direct method. In this article, we will compare those two methods.

March 1, 2015

In this article, we’ll briefly describe how to account for stock warrants, which can be detached from a bond and exchanged for common stock – almost like a coupon

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.

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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.