Category Long Term Assets

Accounting for Investments

Investment is the right to receive cash or cash equivalent in the future. It can be made in commodities, equity securities, debt securities, and derivative securities. In investment, the investor receives continuous cash flows for a definite period of time…

Impairment of Fixed Assets

Fixed assets or non current assets are presented over the balance sheet at their carrying value. However, this should be kept in mind that these assets must not be carried at no more than their recoverable amount. At the end of each accounting period,…

Intangible Assets

Intangible Assets are the non-current assets that do not physically exist. It means that you may not touch these types of assets. However, it does not mean that financial instrument are the intangible assets. They are not and can not be intangible…

Accumulated Depreciation

Accumulated depreciation is the total of each year depreciation. It is not same as depreciation. There is a misconception amoung students who wrongly believe that it is the same as depreciation. Accumulated depreciation is also referred to as Provision for…

Depletion Expense

Depletion is a method of depreciating the natural resoruces such as timber, coal, silver and oil fields etc. In case of depletion, natural resources wear out unlike depreciable asset where natural resources do not get affected. In order to follow…

Amortization of Intangible Assets

Intangible assets do not have any physical existence. Like tangible assets, they are also written of but instead of the term Depreciation, the term Amortization is used. However, it is notable here that only intangible asset with a definite life…

Capitalization of Borrowing Cost

In order to continue its operation, an entity needs funds. If the funds within the organization are short, then the entity has to take loan from outside parties usually from a bank or from a financial institution. Once the loan is…

Lump Sum Purchase of Fixed Assets

It is also called basket purchase of fixed assets or non-current assets. It is a situation when more than one asset is purchased in a single transaction in such a manner that it is not possible to identify the value of…

Exchange of Fixed Assets

In the ordinary course of business, it is quite common that an entity exhange the old asset with the new asset in order to fully utilize its production capacity. The such exchnage may be at a loss or gain to…