Академический Документы
Профессиональный Документы
Культура Документы
Worth $32,000
Leased for 10 years for $5,000 per year
How do we account for it?
$180,000
3 years maturity
$ 10,000 annual repayment
10% interest rate
4: Vines diseases
Highly damaging event
Possible, but not certain
How do we account for this?
Provisions
Provisions are accounting funds that are set aside in the
liabilities side of the balance sheet in order to be used in the
future to cover for possible future costs
A provision can be created if
1. The future event is sufficiently likely
2. The future damage can be reasonably estimated
Both conditions are necessary
It is open to discussion whether in this case the two
conditions are met
Depreciation
decisions?
Because in the real world we have uncertainty
Better explained by the Accounting for a
business project case
3. What are the consequences of accounting
decisions?
By choosing a certain accrual representation of the
cash flow of the transaction we choose one
Income statement
Balance sheet
These two financial statements depend crucially on the
accounting decisions taken by the management