Acquiring property, plant and equipment items means that you have pay up a considerable amount sometimes not for the asset itself but for say import duties. That’s an expense you incurred to acquire the asset, to be able to start using it (otherwise they’d held it at the customs).
Author Archives: Karl
Operating and non-operating items
Often times you hear people talk about operating and non-operating items on the income statement. As it is, those can be defined and separate in various ways, but the principles in doing so remain the same. Continue reading
Extraordinary versus ordinary
There are sometimes terms as ‘extraordinary’ and ‘ordinary’ used in accounting frameworks. Let us define them both and the difference between them. Continue reading
Income statement defined
I get sometimes asked what the entity’s results are. ‘Results’ can be defined in two ways – financial position (e.g. entity’s balances at a certain date) and performance (revenues and expenses for a defined period). Whilst the balance sheet is something we’ll discuss separately, with this I would like to explain the income statement a little further. Continue reading
Reporting capital on statement of changes in owner’s equity
Statement of changes in owner’s equity is a statement that’s prepared usually just once a year for the Annual Report. As it is, it’s important to note that the changes are then reflected from the previous period end to the current period end. Continue reading
Recognizing accruals
The thing with accruals basis of accounting is that sometimes you need to accrue for some expenses. Occasions such as this arise when you need or want to close your reporting period but as it happen, your supplier is set to send you an invoice for services or goods received within the period you want to close at a later date (that is at a date after you’ve closed the period). Continue reading
Acquisiton cost of a PPE item
Acquisition cost of a PPE item is important. It’s a value an asset is initially recognized on the face of a balance sheet and furthermore is depreciated into expenses over a period of time. As it impacts both the amount you carry within your company’s assets and your expenses over a period of time, it’s important to understand and agree on what exactly is included within the cost of the item and what not. Continue reading