Accounting Category: Assets

Accounting Articles

Quite often rent agreements classified as operating leases include uneven rent payment terms (e.g., escalating rent payments or rent holidays). For example, a 5-year building rent agreement may specify that rents will go up 5% every year after the first year. Some companies assume that the rent expense should be recognized based on the rent payments. However, under US GAAP this most probably won’t be true. In this article, we review accounting for lease agreements with uneven rent payments.

Fixed asset donations are rare when one talks about for-profit companies, but such donations are more common when one talks about non-for-profit companies. Fixed asset donations can be inbound or outbound. How does a company account for such donations?

Most companies purchase and use fixed assets (also called property, plant and equipment). Fixed asset costs are allocated to multiple accounting periods by recording depreciation expense. What is the impact of not depreciating fixed assets?

Learn about sunk costs and how they impact investment decision-making.

Leasehold improvements represent additions to a lease property. Accounting for such improvements normally does not present a significant issue except for their amortization. This article covers a common issue which relates to the amortization of leasehold improvements.

From time to time accounting records may present unusual account balances. For example, a customer may have a credit balance in accounts receivable or a vendor may have a debit balance in accounts payable. This article provides examples of such situations and directions on how to approach them from the accounting standpoint. Offsetting assets and liabilities is also discussed.

Companies may build (construct) some of their fixed assets because such assets may not be available for purchase from other companies or because it is cheaper to do so. An important aspect of constructing own assets from the accounting standpoint is the cost accumulation. In this article we will discuss which expenditures should be included in the cost of self-constructed assets (interest capitalization is not covered in this article).

Declining balance methods of depreciation, specifically the double-declining balance method, do not take into consideration the salvage value of an asset when determining the depreciable basis. Some people wonder why that is the case. This article provides the answer.

There are two types of working capital: permanent working capital and temporary working capital. In this article you will learn the difference between the two and how each of them can be financed (funded).

Notes receivable and how they are different from accounts receivable as well as an example of journal entries involving notes receivable.

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Accounting Categories
Accounting categories represent a collection of accounting guides and answers related to one accounting area.