Most businesses use fixed assets which are typically depreciated. Such depreciation can be classified as direct or indirect expense. How can one distinguish between the two? In this article we will discuss this question and provide examples.

Depreciation might sound simple in theory - the company buys a fixed asset and then writes off the cost over a period of time. But what if a company has hundreds or thousands of depreciable assets, each with its own cost, salvage value, and useful life? What if a particular machine has several dozen separate parts that must be replaced at different times? Situations like this call for specialized methods of depreciation.

In the first two parts of this article series, we discussed general capital lease accounting. For this final article, we’ll take a brief look at a special kind of transaction called a sale-leaseback.

In the first part of this article series about capital lease accounting, we discussed accounting for the asset and related liability from the perspective of the lessee. Now we’ll turn to other side of the transaction to look at accounting from the lessor’s perspective.

In this three-part article series, we’ll discuss the accounting treatment for various aspects of a leasing arrangement. This first part will cover capital lease accounting by the lessee (the party that takes possession of an asset in exchange for monthly lease payments).

This article touches upon accounting for stock options which was (and still is) a hot topic in the accounting realm.

We have previously discussed various methods of estimating bad debt expense, including percentage of sales and percentage of accounts receivable. In this article, we expand on the percentage of accounts receivable method by incorporating accounts receivable aging.

The matching principle tells us to expense costs in the same period that those costs provide some benefit to the company. Interpretation of the matching principle gets a bit fuzzy when dealing with research and development.

Many of the accounting principles on this website apply to any type of company. In this series of articles, we focus on the basics of accounting for partnerships, a business entity formed by two or more owners that is less structured than a corporation.

Company managers need to keep track of costs in order to make wise decisions about day-to-day operations. In this article, we discuss process costing, a method of allocating costs for manufacturers of many identical products.