What is valuation, and why is there a need for valuation?
Valuation is appraising or determining the worth of physical or intangible assets, securities, liabilities, and a particular firm as a going concern or any listed or unlisted corporation, partnership, or sole proprietorship. The word ‘value’ refers to an object’s material or monetary worth, which may be measured in terms of the medium of exchange. Valuation […]
What Are the Limitations of Financial Accounting?
Many of us still belief that the financial accounting system is perfect, and it would be a miracle to find something wrong with the financial accounting system. This belief is simply a delusion, and it has been said that people who don’t know the history of accounting should not talk about accounting. However, in today’s […]
What is the discounted cash flow technique?
The discounted cash flow technique is a financial forecasting method to determine how much money they will have leftover after investing in a project. The DCF method is based on the principle that a dollar today is worth more than a dollar in the future because a dollar today can be invested and earn interest. […]
What is the Price Earnings Ratio?
The Price Earnings ratio is defined as a ration that tells investors how much they’re paying for each dollar of a company’s earnings. For example, a P/E of 20 means investors are willing to pay $20 for every $1 of current earnings. This ratio is widely used in the market because it provides investors with […]
What is a Bank Reconciliation Statement?
Bank Reconciliation Statement A bank reconciliation statement is a document that reconciles the balances of a bank’s checking account with the bank’s reported financial statements. A bank reconciliation statement is a document that lists all of the transactions in an account, both deposits and withdrawals, and reconciles the account against the bank’s records. This is […]
IFRS 17 – Insurance Contracts | Overview | Scope | Objectives
IFRS 17 provides guidance on accounting for insurance contracts. It is set to replace IFRS 4, which currently governs accounting for insurance contracts. The purpose of IFRS 17 is to provide investors and analysts with a more transparent and consistent view of insurance companies’ financial performance and risk exposure. IFRS 17 requires insurance companies to […]
IFRS 16 – Leases (Recognition, Measurement and Disclosure)
The International Accounting Standards Board introduced IFRS 16 in 2019, which marked an enormous change in the accounting treatment of leases. Earlier, a company was permitted to classify leases into two types, viz., a finance lease and an operating lease. And if the lease was of an operating nature, then the subject of the lease […]
IFRS 15 – Revenue from Contracts with Customers
IFRS 15 outlines how and when an IFRS reporter would recognise revenue and requires such companies to make more meaningful, relevant disclosures to readers of financial statements. The standard offers a single, five-step model based on a set of guiding principles for all client contracts. Objective The objective of IFRS 15 is to set the […]
IFRS 14 – Regulatory Deferral Accounts
Overview IFRS 14 Regulatory Deferral Accounts permits an entity that is a first-time adopter of International Financial Reporting Standards to continue to account, with some limited changes, for ‘regulatory deferral account balances per its previous GAAP, both on initial adoption of IFRS and in subsequent financial statements. Regulatory deferral account balances, and movements in them, […]
IFRS 13- Fair Value Measurement
IFRS 13 – Fair Value Measurement is a standard developed by the IAS that provides guidance on how to measure fair value in financial reporting. The standard aims to enhance the consistency and comparability of financial statements by setting out a single definition of fair value and providing a framework for measuring it. Fair value […]