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In essence, what does this “depreciation of property, plant and equipment” mean? IAS 16 defines depreciation as “systematic allocation of the depreciable amount of an asset over its useful life”. For easier understanding I think it’s important to tear the definition into pieces – systematic allocation, depreciable amount and useful life.  (more…)

Recognizing collection of receivables

It’s one thing to recognize a sales receivable (note that it’s yet to be received) and another to account for the actual collection (received this “something to be received”. That’s what makes me most happy – its real money received and an asset the company can use for either buying new goods, make investments or […]

Recognizing a vacation reserve

In most countries the employees are entitled to a time off that’s to be paid by you as the employer (it’s your liability until you’ve paid what you owe). This “time off” is normally called as a vacation and as mentioned, within the company’s books this is a liability. Accounting for this liability, a reserve […]

Handling supplier invoices

Do you think that supplier invoices are something that can be thrown around and just laying somewhere? Are supplier invoices obsolete once they’re paid? How do you handle them in order to achieve timely payment? First and foremost, keeping accounting documents (that is all documents you’ve used for your accounting entries within your financial statements) […]