Everthing Flashcards
What is HC
Purchase price + anything needed to get asset ready to use
Capitalised
To record a cost / expense on the balance sheet for the purpose of delaying full recognition of the expense. Meaning depreciated over time, cost is spread over its useful life.
Contra asset definition
An asset account in which the natural balance of the account is 0 or a credit (negative balance) offsetting the asset account it is paired with, reducing the value of that asset.
Identifiable intangiable asset
- specific value
- can be seperatly sold and identified
E.g. patents, trademarks, brand names etc.
Amortisation
Gradually writing off an asset until the initial cost / zero.
Requirements to revalue intangible
Active market - buyers+sellers, prices public
Acquired at cost
Internally generated
Liability
Present obligation from a past event
Constructive obligation
When a company says they will do something and need to follow through
Liability list
PO
PE
UOFEB
RE
Contingent liability
A possible liability that may occur depending on the future e.g. possible lawsuits
Employee benefits are
All for of consideration given by an entity in exchange for service rendered by employees
Vesting vs non-vesting sick leave
Vesting = even if employee leaves work, still entitled to sick leave.
Superannuation
Payments made to employees after their retirement, in a stream of periodic payments or a lump sum.
Lessor
Provider of the asset, receiving payment
Lessee
Obtaining the right of the asset, has an obligation to pay
Operating leases
Do not transfer substantially all the risk and reward of ownership
Finance leases
Do transfer substantially all the risk and reward of ownership
Equity
The residual interest in the asset after deducting all liabilities which is a claim or right to the net asset of entity
Ordinary share vs preference share
Ownership: A unit of ownership in a company, ranks last, fluctuates w market
Preference: more important, 2nd priority after paying creditors and debts, fixed %
Reserves
Funds set aside by a company for specific purposes, risk management, growth, financial stability
Bank trust
Temporary holdings, funds are temporarily deposited into a bank trust a/c ensuring find are segregated
Direct costs
Deducted directly from the share issue, needed for legal requirement
Indirect costs
Not deducted from share issue, expense
Interim dividends
Paid during financial year befor determination of final profit
