Understanding Carbon Accounting
Also known as greenhouse gas (GHG) accounting, carbon accounting is a way for managers and analysts to measure a company’s total carbon emissions. It’s a comprehensive approach to analyze how a company uses energy for its buildings, offices, conveyances and production processes. Carbon accounting examines firsthand, secondhand and tertiary energy uses. Environmental, Social & Governance […]
Breaking Down Bill-and-Hold Arrangements
Looking at accounting and journal entry considerations, if accounts receivables are debited and revenue is credited, it can be interpreted as the business recognizing revenue without the customer paying. As such, the U.S. Securities and Exchange Commission (SEC) sees the potential for intentional manipulation of earnings. It is important to review this type of transaction […]
How to Account for Stranded Assets
With more than 14 million electric vehicle (EV) registrations in 2023 worldwide and 2023 seeing an increase in EV sales over 2022 by 35 percent, manufacturers are probably happy – but not those producing the traditional internal combustion engine (ICE) vehicles. This is according to the International Energy Agency’s Global EV Outlook 2024: Trends in […]
Accounting for Convertible Debt Instruments
According to EY, the convertible debt market saw whipsaw action in issuances. Between 2015 and 2019, average issuance varied between $40 billion and $45 billion. However, it dropped to $22 billion in 2022, but re-accelerated to $52 billion in 2023. While the levels of issuance varied, the way this type of debt is accounted for […]
How to Report for Comprehensive Income
Comprehensive income (CI), which is defined as the sum of net income (NI) and other comprehensive income (OCI), gives both the internal and external audiences a 30,000-foot perspective of a company’s valuation. Understanding how it’s broken down, how it’s accounted for, and how it’s interpreted by different audiences is essential to making favorable impressions. In […]
The Differences Between Conclusion of Value and Calculation of Value
When a business is looking for a valuation, it needs to decide whether to use the calculation of value approach versus the conclusion of value option. The conclusion of value calculation is a more rigorous and resource-intensive calculation of value. Both approaches are similarly dependable, and despite the calculation of value’s less in-depth approach, business […]
Liquidation Value Versus Going-Concern Value
Whether it’s a company firing on all cylinders or a company on the verge of liquidation, determining correct valuations is not a cut-and-dry process. Understanding the importance of going-concern values and liquidation values is essential when determining a business’ worth. Quantifying Going-Concern Value When it comes to defining this type of value, it factors in […]
Working Capital and the Role it Plays in Your Business’ Success
The accounting term working capital is essential knowledge for all business owners. Basically, it is the ability of a business to meet its ongoing obligations. Learning about some of the different aspects of working capital is vital for any successful business owner. Net operating working capital (NOWC) is the gap between a business’ current assets […]
Taking a Closer Look at Trial Balances
A trial balance is an accounting tool that helps businesses determine if the double entry accounting system has any mathematical errors. Once the trial balance is worked through, and the total debits and total credits equal each other, we know there are no mathematical errors – but that doesn’t mean it is error free. It […]
Contingent Liability Defined
As the name implies, a contingent liability for a business does not always happen and depends on how the future unfolds. When it comes to a business analyzing a contingent liability, it focuses on the probability of the business realizing it, the time frame within which the liability might occur, and the accuracy of the […]