Quantcast
Channel: PakAccountants.com » ACCA – F7
Browsing latest articles
Browse All 98 View Live

What is the recognition criteria for subsequent expenditures incurred on...

Subsequent expenditures refers to such costs which are incurred after the asset is recognized in the financial statement and brought to the location and condition intended. Examples of such...

View Article



Can asset be classified as ‘held for sale’ if not sold within one year?

International Financial Reporting Standard – IFRS 5: Non-current Assets Held for Sale and Discontinued Operations recognize the fact that events and circumstances may cause the sale of asset to be...

View Article

What are Real accounts and what is the related ledger and the accounting rule?

There are many different ways in which accounts can be classified and types of accounts be discussed. One of the ways is to divide all of the accounts in personal and impersonal accounts. Real accounts...

View Article

What are the limitations of Balance Sheet or Statement of Financial Position?

Statement of financial position or Balance sheet is the essential part of the complete set of financial statements. It is also one of the most sort after source of information for the users of...

View Article

What are different inventory valuation methods?

There are numerous valuation techniques to value the inventory or stock. However, here is the short list of those which are known. To learn more about each method, click the name! Specific...

View Article


What is NIFO inventory valuation method?

NIFO – Next in, First out is an inventory valuation technique in which issues to the production hall are valued at the current market price i.e. current cost or replacement cost instead of the cost at...

View Article

What is complex asset or separate component asset?

An asset that consistes of different components and each component is significant in relation to the cost of the asset then such assets are called complex assets or separate components asset. This...

View Article

What is meant by Depreciation?

Depreciation simply means a steady decrease in the value of asset. Often it is studied in relation to the time period over which such decrease in the value has occurred. Therefore, often it is also...

View Article


How interest and dividends are disclosed in statement of cash flows?

This often confuse students who are studying Statement of Cash Flows that what is the correct way of disclosing or presenting interest paid or received and dividends paid or received during the period....

View Article


How a loan repayment is disclosed in statement of cash flows?

First things first, a loan can be repaid in number of ways for example in cash, by handing over certain asset or converting debt to shares etc. But if the repayment does not involve cash outflow then...

View Article

What transactions are adjusted in profit or loss to prepare statement of cash...

Statement of Cash Flows or Cash Flow Statement can be prepared using two methods; direct method or indirect method. As under indirect method, income statement or statement of comprehensive income is...

View Article

Which method is preferable to prepare Statement of Cash Flows?

International Accounting Standard (IAS) 7 Statement of Cash Flows give entity the choice to choose freely in selecting the method to prepare statement of cash flows. Moreover, IAS 7 does not bound...

View Article

How a liability paid in kind or by issuing shares is disclosed in statement...

Most of the time entities pay out their liabilities, whether short term or long term, in cash. And by cash it means either in hard cash or by issuing cheque or using cash equivalents. Sometime company...

View Article


How preparing statement of cash flows is different under IFRSs and GAAPs?

One of the key benefits of statement of cash flows or cash flow statement is its comparability. This is due to the fact that although we have difference accounting frameworks in the world even then...

View Article

What is meant by ‘net of’ in accounting or tax and other business related...

The expression ‘net of’ represents the exclusion of something from a particular sum. For example net of tax means the resultant amount which is exclusive of tax or in other words the amount we get...

View Article


What is ‘Declining balance to Straight line crossover’ method of depreciation?

Majority of the students studying accounting, either at initial stages or experienced in accountancy academics, are familiar with two of the most renowned depreciation methods used by entities to...

View Article

What is french straight line method of depreciation?

French straight line depreciation method is not completely a new method to calculate depreciation. Rather it is more of a derivation or extended version of usual straight line method accounting...

View Article


What is the difference between Purchase ledger and Purchase account?

Quite a basic question in fact. A lot of students realize about these concepts as soon as they start studying Auditing especially when they have to apply different audit procedures where these basic...

View Article

What type of accounts are maintained under Purchases ledger?

i-ask! | Have a question? Ask Tutor! What type of accounts are maintained under Purchases ledger? What entries are posted in purchase ledger? Also what is the difference between purchases ledger and...

View Article

What are different causes of Depreciation?

Here are some of the reasons or causes of depreciation: Physical loss Any damaging change in the physical features of the asset or  in the productivity, efficiency or effectiveness of the asset either...

View Article

What is the difference between General Journal and General Ledger?

Journals, also known as Books of Prime Entry or Books of Original Entry are the first books of accounting in which transactions are recorded in a chronological order following certain rules and...

View Article


What is Depreciation?

Depreciation basically signifies a steady decline in the value of asset. Generally it is studied in terms of the period of time that such decline in the value took place. Therefore, it is also...

View Article


Why amortisation of goodwill is not permissible?

Before IFRS 3 was introduced, entities were allowed to amortize goodwill. However, after it was introduced back in 2004-2005, amortization of goodwill was strictly prohibited and entities were required...

View Article

How Goodwill is an asset?

If we look for the answer to the question that why goodwill is an asset, then there is no specific explanation given in two of the renowned accounting frameworks i.e. IFRSs and US GAAPs. Although, the...

View Article

What is meant by Economic benefits and how they flow to the entity?

It is easy to understand that entities around the world hold different sets of machinery, plant, equipment, building, land and other kinds of assets through which it offers products or services to its...

View Article


Why impairment of goodwill is not reversed?

First of all we must be clear that goodwill is an intangible asset that entities can recognize in their financial statements but only such goodwill that is acquired in business combination. Internal...

View Article

Is Residual value of the asset calculated on Present value or Future value...

One of the reasons for charging depreciation against the historical cost of the asset, revalued amount or simply carrying value of asset is that asset’s book value should be reduced to such residual...

View Article

What factors are considered in determining useful life of intangible asset?

Determining useful life of an intangible asset is not as easy as a tangible asset as most often intangible assets are of such nature that are unique and have no similar asset in the market through...

View Article

What is revenue recognition and accounting treatment for goods sold or sent...

Before we discuss the recognition principle and accounting treatment for sales under sale or return conditions. First lets have ourselves clear about what is meant by sale or return? Under sale or...

View Article



What is meant by Sale or Return?

Buying and selling arrangements between sellers and buyers may take different forms and sales contracts can have some unusual terms agreed between the parties. However, one of the common arrangements...

View Article

What is the difference between depreciation account and accumulated...

Capital assets also known as fixed assets are simply such assets which are used over a period longer than one year. Although real cash outflow takes place for the whole price at the time of acquisition...

View Article

What is a non-cash expense?

Non-cash expenses are such expenses that do not involve real cash outlay or against which no real cash outflow has taken place at least in the period in which such expense has been reported. And as...

View Article

Is Accumulated depreciation an expense account or an asset account?

Before this question is answered specifically it will be good if we clear an important connected concept of historical cost. According to historical cost concept, assets are recognized and reported in...

View Article


Is Sales tax included in the cost of the asset?

General rule is that everything paid specifically for the asset will form part of the cost of the asset purchased by the entity i.e. any cost incurred specifically towards the asset until it is brought...

View Article

What is the difference between Cash basis and Accrual basis accounting and...

Accrual basis of accounting is one of the underlying assumption for preparing financial statements under International Accounting Standards. IASB Framework clearly demanded the financial statements to...

View Article

What is the accounting treatment for sale of fixed asset?

First important thing to understand is that the tern fixed asset or non-current assets are such resources of assets which are not bought or sold as main activity of the business and are distinct from...

View Article


What is Retail Price method of inventory valuation?

Inventory is an important asset entity holds and its valuation is critical as it not only affects figures in statement of financial position but also profit calculation. There are several methods to...

View Article


What is meant by Accounting concepts and principles?

Accounting is one of the vital tools to collect financial information pertaining to business activities. The same information is used in economic decisions users make. The apex of accounting or...

View Article

What is the difference between accounting concepts accounting principles and...

These three are definitely different but connected and their connection is critical in accounting. Under International Financial Reporting Standards (IFRSs) IASB Framework sets out accounting concepts...

View Article

What is Matching principle in accounting?

Accounting principle that requires costs to be recognized after matching with the revenues earned associated with such costs i.e. the amount of costs recognized must be on equal footings with the...

View Article

What is Income approach to fixed asset revaluation?

After initial recognition at cost if the carrying value of an item (of property, plant and equipment) is significantly different from the value measured on fair value basis then revaluation of asset is...

View Article


How fixed assets are revalued if fair value cannot be determined using market...

IAS 16 Property, Plant and Equipment (IAS 16) recognizes the fact that fair value of every asset may not be determined using market value basis. Although it is recommended and hardly the case where...

View Article

What is Depreciated replacement cost?

Depreciated replacement cost is an optimised form of replacement cost method to make the estimate more realistic by adding the aspect of depreciation to a simple replacement cost concept for valuation...

View Article


How to account for change in residual value of fixed asset?

International Accounting Standard (IAS) 16 recognizes that residual value of asset may increase or decrease as a result of revaluations or future assessments of non-current asset. IAS 16 recognizes...

View Article

What is the difference between a Fair presentation framework and a Compliance...

Financial statements are prepared to fulfill information needs of its users. In order to cater the needs at best a certain financial reporting framework is used considering the jurisdiction in which...

View Article


What is work in process or work in progress inventory?

Work in process inventory is such asset that is still in the process of completion and not yet ready to be categorised as finished goods.In a manufacturing concern raw materials are converted to...

View Article

What is age, aged, ageing or aging analysis?

Age analysis is simply a time-based analysis with reference to due date to determine either how much time is left until due date or how much time has passed since due date. Most of the time age or aged...

View Article

What is meant by Carriage inwards and its accounting treatment?

Carriage inwards, transportation inwards, transport inwards, freight inwards or shipping cost are the cost borne by the buyer of the goods for moving the goods from supplier’s place to his own place...

View Article

How to account for Temporary Investment Incomes on funds from Specific...

It is a usual practice that if entity has borrowed funds to finance a qualifying asset then they might be invested temporarily until the funds are needed. This gives rise to a question if these...

View Article


What is the accounting treatment of Grants related to Income (Revenue Grants)?

According to IAS 20 government grants are simply assistance to the entity by the government to give or help entity get economic benefits. Such assistance can help either in acquiring or building...

View Article

Browsing latest articles
Browse All 98 View Live




Latest Images