You bought an asset and capitalized it. Did you give the thought that you might have actually replaced something any consideration? Why is it even important?
Matter of fact is that if you buy a new asset, it could very well be that you actually replaced something and this “something” should be written off from the balance sheet, disposed if you will. It could be up for being sold, but there should be an action you take to get rid of the asset from your accounts. Continue reading
I know that you’ve probably heard a lot about it. The useful life of the asset is the period over which it’s depreciated into expenses and the period should always equal to the period the asset is actually going to be used. So in short the estimation should always equal to the actual usage. Continue reading
How would you determine the useful life for a completely new asset, type of something you’ve never had? Say that you’re experimenting, expanding you business or trying to do something new. Continue reading
The production price of your goods in stock should include all expenses that were made in direct connection with producing them. However, what happens if it’s not so and the pricing only includes the direct material for an example? Continue reading
You produce goods and price them according to your expenses. However, which of your expenses from the income statement are included? You may ask now if all expenses on the income statement should be included within the price of the produced inventory. Well, the answer is that in fact not all need to be included, but quite a lot of them. Continue reading
When starting to group your expenses, when initially preparing your set of accounts, think through the subject nature of the accounts and the expenses you plan to put to those accounts – are they similar in nature? Always ensure that the account name describes which expenses are accounted onto them. That’s first. Continue reading
First question you may have is “Why would I do this?” Think about depreciation and if land is depreciated in the accounting framework used in your country. If yes, maybe it’s a relevant question. That is if the useful lives are also deemed to be the same as for buildings on top of the land in question. Continue reading