Asset

According to ASC 805, how is goodwill to be recorded (calculated)? Under ASC 805 the parties in the transaction are required to first value all identifiable assets acquired at their fair value. Goodwill is considered the residual amount. Goodwill is considered an asset that represents the future economic benefits arising from the other assets acquired in the business combination that did not meet the criteria for being individually identified and separately recognized. Goodwill is recorded as…

Days in inventory = Inventory / (Cost of goods sold÷365 days) = $89,562 / ($466,562÷365 days) = $89,562 / 1,278.25 = 70.07 ≈ 70 days Days sales outstanding = Accounts receivable / (Annual credit sales÷365 days) = $56,753 / (727,679÷365 days) = $56,753 / 1,993.64 = 28.47 ≈ 28 days Days in payables = Accounts payable / (Cost of goods sold÷365 days) = $38,585 / ($466,562÷365 days) = $38,585 / 1,278.25 = 30.19 ≈ 30 days Cash conversion period = Days in inventory + Days sales…

current and non-current assets and liabilities (Miller, 2009). Current assets can include but not limited to cash and bonds/CDs with original maturities of less than a year, whereas, current liabilities can include accounts payable, accrued salaries, accrued vacation, or deferred revenue that can be earned in a year (Miller, 2009). Net assets also should be divided according to whether or not donor-imposed restrictions have been placed. Therefore, any changes in the net assets in either of…

activities—presents the changes in the balance sheet accounts and income affecting the cash and cash equivalents (Matan & Hartnett, 2013). • Investing activities: the section addresses the amount of cash used to acquire assets to receive through sale or disposition of assets, such as purchases and sales of property as well as investments (Greater Washington Society of CPAs, 2015). • Financing activities: the section reports the amount of cash used to settle liabilities or received by…

2.1.2 Liquidity Google Inc. has minimal liabilities mainly related to payables, short-term debt, accrued expenses, and securities payables. It was able to cover its current liabilities obligations using current assets at a rate of 5.90 times in 2014. The measurement reduced to 4.22 times coverage in 2012 as the level of short-term debt and accrued expenses/liabilities rose substantially. The most liquid measurement of quick ratio was also above 1:1 at 5.90 times coverage in 2011 and 4.18 times…

their pocket. But ownership doesn’t need to be defined as something that can be felt or legally presented as ours. Every thought that races through our minds, every experience, acquired knowledge, and our memories, we own those, too. The palpable assets, they give others an insight on our tastes, yet they do not define us. When someone truly owns something it cannot be taken away. Ownership is knowing something deep within us and making it a part of ourselves.…

AASB 116 discusses the recognition and treatment of PPE and sets guidelines to be followed by companies which allow the users of financial statements in understanding the investment and changes to investments in a company’s PPE (AASB, 2015). The standard defines PPE as tangible items that are held for production or supply of goods or services, for rent or administrative purposes and are anticipated to be used for a long period (AASB, 2015). Recognition of PPE As per AASB 116 (AASB, 2015), PPE…

market risk and specific risk. The market risk and specific risk are the components that make up the total risk of any investment. Market risk and specific risk are two different forms of risk that affect assets. Market risk is also referred to as systematic risk and it affects a large number of asset classes (Nickolas, 2015). Market risk is the risk inherent to invest in a specific market. Each of the markets has their own inherent risks and the level of the risk(s) is different in each of the…

Liquidity is used to describe how easy it is to convert assets to cash. Capital structure can be described as a firm’s debt-to-equity ratio, and it tells how risky a company is. Companies who are associated with greater capital structure pose a bigger risk to investors, but the risk can be the primary source…

ratio, inventory turnover, asset turnover, profit margin on sale, return on assets, times interest earned ratio and cash debt coverage ratio. The current ratio is a liquidity ratio that assesses the company’s operating efficiency. The current ratio is computed by dividing the company’s current assets by current liabilities to assess whether it has enough resources to meet its obligations even when faced with unexpected events. In business, if the company’s current assets compared to current…