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What is the Difference between asset method and expense method?
the asset method = record all purchases as asset then recognize expense (diff of beg bal & end bal) dr. prepaid supply (purchase) cr. cash expense method = record all purchases as expense, then account for the ending balance. adjust beg balance to reflect end balance. dr. supply expense cr. cash
How do you treat a purchase of a new component of a fixed asset?
As per IAS 16: If purchase of component of fixed asset is major part of original asset or purchase of component increase the effectiveness or live of asset then it is treated as a part of original price and treated as asset. If purchase of component is routine purchase for small repair etc then it is treated as revenue expense.
Is a purchase discount account an asset or liability?
It is a contra asset account; thus, an ASSET
How do you calculate depreciation using units of production?
To calculate depreciation using the units of production method, you first determine the total estimated production capacity of the asset over its useful life. Then, calculate the depreciation expense per unit by dividing the cost of the asset (minus any salvage value) by the total estimated production units. Finally, multiply the depreciation expense per unit by the actual number of units produced in a given period to determine the depreciation expense for that period. This method aligns the expense with the asset's actual usage.
What will a purchase of an asset for cash do?
A purchase of an asset for cash will increase total assets(casH) and increase total owner's equity (capital).
How do you calculate capital gains when selling an asset?
To calculate capital gains when selling an asset, subtract the purchase price from the selling price. This difference is the capital gain.
What is the difference between transfer and sale?
Transfer embodies every method of disposing of an asset, voluntary or involuntary. A sale is the voluntary transfer of an asset for consideration. You get something in return.
How will calculate annuity method in depreciation?
To calculate depreciation using the annuity method, you divide the depreciable cost of the asset by the estimated useful life in periods. This will give you the annual depreciation expense for the asset. You can use formulas or online calculators to streamline the calculation process.
What is the Difference between asset method and expense method?
the asset method = record all purchases as asset then recognize expense (diff of beg bal & end bal) dr. prepaid supply (purchase) cr. cash expense method = record all purchases as expense, then account for the ending balance. adjust beg balance to reflect end balance. dr. supply expense cr. cash
How do you treat a purchase of a new component of a fixed asset?
As per IAS 16: If purchase of component of fixed asset is major part of original asset or purchase of component increase the effectiveness or live of asset then it is treated as a part of original price and treated as asset. If purchase of component is routine purchase for small repair etc then it is treated as revenue expense.
How do you calculate capital gains for tax purposes?
To calculate capital gains for tax purposes, subtract the original purchase price of an asset from the selling price. This difference is the capital gain, which is then taxed at a specific rate based on how long the asset was held before being sold.
Is a purchase discount account an asset or liability?
It is a contra asset account; thus, an ASSET
What are the various methods of valuation of shares discribe and illustrate net asset method of valuing shares?
They include; Intrinsic Value Method, Yield Method and Net Asset Method.
How do you calculate depreciation using units of production?
To calculate depreciation using the units of production method, you first determine the total estimated production capacity of the asset over its useful life. Then, calculate the depreciation expense per unit by dividing the cost of the asset (minus any salvage value) by the total estimated production units. Finally, multiply the depreciation expense per unit by the actual number of units produced in a given period to determine the depreciation expense for that period. This method aligns the expense with the asset's actual usage.
How do you calculate depreciation using Written Down Value Method?
Rate of depreciation = 1-(salvage value/Cost of asset)^(1/n) n-> useful life of the asset. This rate of depreciation is charged on the net book value of the asset of each year.! The depreciation rates are high at the start and low towards the end of useful life of the asset
In construction company purchase of cow is an asset or indirect exp?
in contruction company purchase of cow is an asset or indirect expenditure
What will a purchase of an asset for cash do?
A purchase of an asset for cash will increase total assets(casH) and increase total owner's equity (capital).
