Presentation of Defined Benefit Pension Plans
Under a defined contribution plan, a company contributes a defined amount, i.e., pension expense into the plan. Under a defined-benefit plan, a company commits to pay future benefits to employees during their retirement. Presentation and Disclosure Related to DC and DB…
Measurement of Finance Leases
Introduction In a finance lease, the lessor transfers substantially all the risks and rewards incidental to legal ownership of a leased asset. A finance lease is also economically similar to borrowing money and buying an asset. Initial recognition, measurement, and…
Leases from a Lessee’s Perspective
A finance (or capital) lease is equivalent to a lessee’s purchase of an asset that is directly financed by the lessor. An operating lease, on the other hand, is an agreement that allows a lessee to use an asset for…
Explain the Derecognition of Debt
At maturity, the discount or premium on bonds is fully amortized and the carrying amount is equal to the face value. Upon repayment, bonds payable are reduced by the carrying amount (face value), and cash is reduced by the same…
Reported and Common-size Cash Flow Statements
Users of financial statements can obtain useful information about a company by analyzing its cash flow statement. This can help them to understand the company’s business and earnings as well as predict its future cash flows. The common-size analysis of…
Analyze and Intperret Financial Statement Disclosures
Users of financial statements can use financial statement disclosures to deepen their understanding of a company’s investments in tangible and intangible assets. Financial statement disclosures divulge such details as how those investments have changed during a reporting period, how the…
Impairment, Revaluation and Derecognition
The impairment, revaluation, and derecognition of a company’s property, plant, and equipment, as well as its intangible assets, can significantly affect its financial statements and the financial ratios derived from them. The Effect of Impairment, Revaluation, and Derecognition on Financial…
Explain the Impairment of Property, Plant, and Equipment and Intangible Assets
An asset is said to be impaired when its carrying amount is greater than its recoverable amount or fair value. Impairment losses will be recognized whenever the asset’s carrying amount is not recoverable. At the end of each reporting period,…
