R&D Capitalization vs Expense Under the United States Generally Accepted Accounting Principles (GAAP), companies are obligated to expense Research and Development (R&D) expenditures in the same fiscal year they are spent. It often creates significant volatility in profits (or losses) for many companies, as well as difficulty in measuring their rates of return on assets…
What is a Lease? Leases are contracts in which the property/asset owner allows another party to use the property/asset in exchange for some consideration, usually money or other assets. The two most common types of leases in accounting are operating and finance (or capital) leases. It is worth noting, however, that under IFRS, all leases…
Introduction to Pension Accounting In addition to salaries, many companies offer other benefits to their employees such as pension plans, health insurance, stock option benefits, fitness memberships, or life insurance plans. There are very specific requirements around pension accounting, which will be outlined in this article. For regular benefits, the accounting is relatively simple –…
What is Cash Flow from Investing Activities? Cash Flow from Investing Activities is the section of a company’s cash flow statement that displays how much money has been used in (or generated from) making investments during a specific time period. Investing activities include the purchase of long-term assets (such as property, plant, and equipment), the acquisition of other…
What are Financial Assets? Financial assets refer to assets that arise from contractual agreements on future cash flows or from owning equity instruments of another entity. Financial instruments refer to a contract that generates a financial asset to one of the parties involved, and an equity instrument or financial liability to the other entity. A…
What are Subsequent Events? Subsequent events are events that occur after a company’s year-end period but before the release of the financial statements. In other words, subsequent events are events that happen between the cut-off date and the date in which the company issues its financial statements. Depending on the situation, subsequent events may require disclosure…
What is Google Sheets? Google Sheets is a free, web-based spreadsheet application that is provided by Google within the Google Drive service. The application is also available as a desktop application on ChromeOS, and as a mobile app on Android, Windows, iOS, and BlackBerry. The Google Drive service also hosts other Google products such as…
What is Revenue Recognition? Revenue recognition is an accounting principle that outlines the specific conditions under which revenue is recognized. In theory, there is a wide range of potential points at which revenue can be recognized. The following guide addresses recognition principles for both IFRS and U.S. GAAP. Conditions for Revenue Recognition According to the…
What is Customer Profitability Analysis? Customer Profitability Analysis is a tool from managerial accounting that shifts the focus from product line profitability to individual customer profitability. Activity Based Costing looks at the various cost drivers to accurately isolate costs and determine a product’s profitability. In contrast, Customer Profitability Analysis is a method of looking at…
