Obsolescence is the process of becoming out of dates before the asset physically wears out. Revenue-producing ability may also decline because of obsolescence. For example, major airlines moved from Chicago’s Midway Airport to Chicago-O’Hare International Airport because Midway’s runways were too short for jumbo jets. Similarly, many companies replace their computers long before they originally planed to do so because improvements in new computing technology make the old computers obsolete.
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- Product costs
Product costs are costs that are a necessary and integral part of producing the finished product. Companies record product costs, when incurred, as inventory.
Premium is the difference between the selling price and the fact value of a bond/stock, when the bond/stock is sold for more than its face value.
- Payment date
On the payment date the company mails dividend checks to the stockholders and records the payment to the dividend.
- Modified accelerated cost recovery system (MACRS)
Many corporations use straight-line in their financial statements to maximize net income. At the same time, they use a special accelerated-depreciation method on their tax...
- Owner’s equity statement
Owner’s equity statement is a financial statement that summarizes the changes in owner’s equity for a specific period of time. The time period is the same as that covered...
- Purchase returns & Allowances
Purchase return means a return of goods from the buyer to the seller for a cash refund if the purchase was for cash or, credit if the sale was made on credit.
- Internal rate of return (IRR)
Internal rate of return (IRR) is the interest rate that will cause the present value of the proposed capital expenditure to equal the present value of the expected net annual cash flows.