The first thing to define is what a lease itself is. It’s an agreement or contract where one party, the lessor, allows another individual or business, the lessee, to use their asset in return for payments or different assets. The next step is to define the following types of leases. The two types covered in … Continue reading “Understanding Operating and Capital Leases”
The term mark-to-market is an important phrase in corporate finance that has many nuances and industry-specific uses. Mark-to-market is a corporate finance term that provides businesses with a way to evaluate a holding’s fair value for both assets and liabilities. Since values can change over time, this gives a rational assessment of a business’ present … Continue reading “Understanding Mark-to-Market”
When it comes to determining if a business is eligible to claim a net operating loss (NOL), it depends on the financial situation. If a business’ taxable income is less than its allowable deductions in a set tax period, usually a year, then the business can utilize the NOL deduction on future tax obligations. Since … Continue reading “Evaluating Net Operating Loss Considerations”
When it comes to accounting for capital assets, specifically depreciating capital assets, the Governmental Accounting Standards Board (GASB) provides guidance to state and local governments for accounting processes. The GASB is responsible for the generally accepted accounting principles (GAAP) for the private sector (corporate and business accounting), and it works to promote clear, consistent, transparent, … Continue reading “How to Account for Capital Assets”
Purchase acquisition accounting is the commonly accepted method to document the acquisition of another business on the balance sheet of the acquiring company. The business’ assets that are being acquired are documented on the acquiring firm’s books at fair market value. The fair market value – defined as what assets would go for on the … Continue reading “Purchase Acquisition Accounting”
According to the Federal Register, there were about 90,000 local and state government entities throughout the country in 2022. This number is comprised of towns, counties, cities, special districts, and independent school districts. One of the commonalities these organizations share is their use of modified accrual accounting. Understanding the Differences Between Cash and Accrual Accounting … Continue reading “Understanding Modified Accrual Accounting”
Liquidity refers to a business’s ability to convert its short-term assets or securities into cash quickly to meet its short-term financial obligations or pay bills due within the next 12 months. Naturally, cash is the most liquid. This is different than solvency, which refers to the ability of a business to satisfy its long-term bills. … Continue reading “How to Look at Liquidity through an Accounting Lens”
Blockchain has the promise to revolutionize the way businesses and their accountants keep track of their financial records. When it comes to audit evidence, blockchain may be able to give organizations more efficient ways to bring financial data into universal conformity; help businesses present relevant financial data in an open manner; and interpret and select … Continue reading “How Blockchain Could Impact Accounting and Auditing”
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