Contents tagged with Accountancy
today I want to write a short note about Depreciation and Amortization and whati is the difference between both.
So both of them reflect information about loosing value of some non current asset. If company bought something for one price, and with time that something looses it's value.
What the difference?
Depreciation is connected to tangible asset.
Amortization is connected to intangible asset.
For example loosing of value of laptop is characterized by depreciation.
Loosing of value of software is characterized by amortization. more
now let's go for liability definition.
Liability in accountancy word definition is like this: present obligation of the firm to transfer economic benefits in the future to another party that arise from a past event or transaction.
Definition has following key parts:
past transaction event
From this standpoint bank loan is liability.
Potential lawsuite without estimated fine size can't be liability, but definetly should be mentioned in footnotes of balance sheet.
3 years warranty is also liability. For example warranty for the car. And if company can estimate their obligations on warranty then those kind of liabilities are … more
today I want to write few words about difference between something important in the company, that can be asset and close to asset but not be considered as asset from acocuntancy standpoint.
First of all let's start from definition. Asset has three key parts in its definition:
arises from transaction
Full definition of asset sounds like this: Asset is a resource owned or controlled by the firm that it is expected to generate future economic benefits and arises from a past event or transaction.
From this definition stnadpoint piece of equipment which is worth 1M $ is an asset because
owned by company
will generate profit
resulted … more