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Accounting Terms Dictionary
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Accounting Terms Dictionary

Assets: Definition and Classification

Assets: Definition and Classification

Definition of assets
--> Assets represent future economic benefits.
--> Future benefits should be probable.
--> Past transactions created future benefits.
--> Future benefits are controlled by an entity.

Assets: Classification

1. Current assets and noncurrent assets
--> current assets will be converted into cash within one year
--> noncurrent assets will be converted into cash after one year

[Example]
On March 1, 2011, Entity A loaned $100,000 to Entity B. The loan is due on September 1, 2012.
Is this a current or noncurrent asset on the Statement of Financial Positions as of December 31, 2011?
--> Since the loan is due within a year from December 31, 2011, it is reported as a current asset.

2. Cash and receivables
--> Cash is a financial asset.
--> Receivables include accounts receivable and notes receivable.

[Example]
On April 1, 2011, Entity A sold 200 units of product to Entity B at $10 per unit on credit.
April 20, 2011, Entity B paid $2,000 to Entity A.
Prepare journal entries for these transactions.

April 1, 2011
To record the sale of products on credit

  debitcredit
Accounts receivable2,000 
      Sales 2,000


April 20, 2011
To record the collection of accounts receivable

  debitcredit
Cash2,000 
      Accounts receivable 2,000


3. Inventories and prepaid expenses
Inventories include:
--> merchandise
--> raw materials
--> work in process
--> finished goods

Prepaid expenses include:
--> prepaid rent
--> prepaid insurance

Prepaid expenses are assets, because the entity will receive economic benefits from the amount of expenses paid in advance.

[Example]
On November 1, 2011, Entity A paid $60,000 cash as a rent for six months from November 1, 2011 to April 30, 2012.
Prepare journal entries for these transactions.

November 1, 2011
To record prepaid rent expense

  debitcredit
Prepaid rent60,000 
      Cash 60,000


December 31, 2011
To record rent expense for the period from November 1 to December 31, 2011

  debitcredit
Rent expense20,000 
      Prepaid rent 20,000


April 30, 2010
To record rent expense for the period from January 1 to April 30, 2012

  debitcredit
Rent expense40,000 
      Prepaid rent 40,000


4. Investments in debt and equity securities
--> Trading securities
--> Available for sale securities
--> Held to maturity securities

5. Property, plant and equipment
--> Land
--> Buildings
--> Machinery
--> Equipment

6. Intangible assets
--> Intangible assets do not have physical substance
--> Patents
--> Trademarks
--> Copyright
--> Goodwill






Index of Accounting Terms Dictionary


U.S. GAAP by Codification Topic 
 
 105  GAAP Hierarchy 
 105  GAAP History 

 205  Presentation of Financial Statements 
 205-20 Discontinued Operations 
 210  Balance Sheet 
 210-20 Offsetting 
 220  Comprehensive Income 
 225  Income Statement 
 225-20 Extraordinary and Unusual Items 
 230  Statement of Cash Flows 
 250  Accounting Changes and Error Corrections 
 260  Earnings per Share 
 270  Interim Reporting
 
 310  Impairment of a Loan
 320  Investment Securities 
 320  Other-Than-Temporary Impairments, FSP FAS 115-2 
 320-10-05 Overview of Investments in Other Entities 
 320-10-35 Reclassification of Investments in Securities
 323-10 Equity Method Investments
 323-30 Investments in Partnerships and Joint Ventures 
 325-20 Cost Method Investments 
 330  Inventory

 340-20 Capitalized Advertising Costs 
 350-20 Goodwill 
 350-30 Intangibles Other than Goodwill 
 350-40 Internal-Use Software 
 350-50 Website Development Costs 
 360  Property, Plant and Equipment
 360-20 Real Estate Sales 
 
 410  Asset Retirement and Environmental Obligations 
 420  Exit or Disposal Cost Obligations 
 450  Contingencies 
 450-20 Loss Contingencies 
 450-30 Gain Contingencies
 480  Redeemable Financial Instruments 

 505-20 Stock Dividends, Stock Splits 
 505-30 Treasury Stock




 605  SEC Staff Accounting Bulletin, Topic 13 
 605-25 Revenue Recognition - Multiple Element Arrangements 
 
 715-30 Defined Benefit Plans - Pension
 718  Share-Based Payment 
 730  Research and Development 
 730-20 Research and Development Arrangements 

 805  Business Combinations  
 810  Consolidation 
 810  Noncontrolling Interests 
 810  Consolidation of Variable Interest Entities, SFAS 167 
 
 815  Derivatives and Hedging Overview 

 820  Fair Value Measurements  
 820  Fair value when the markets are not active, FSP FAS 157-4
 825  Fair Value Option 

 830  Foreign Currency Matters 
 830-20 Foreign Currency Transactions 
 830-30 Translation of Financial Statements 
 835  Interest 
 835-20 Capitalization of Interest 
 835-30 Imputation of Interest 

 840  Leases 
 840-20 Operating Leases 
 840-30 Capital Leases 
 840-40 Sale-Leaseback Transactions
 845  Nonmonetary Transactions 

 855  Subsequent Events 
 860-20 Sale of Financial Assets, SFAS 166 
 860-50 Servicing Assets and Liabilities, SFAS 156 

 985-20 Costs of software to be sold  





   IFRS 1 - IFRS 9
IFRS Overview
IFRS 1: First-time adoption of International Financial Reporting Standards
IFRS 2: Share-based payment
IFRS 3: Business combinations
IFRS 4: Insurance contracts
IFRS 5: Non-current assets held for sale and discontinued operations
IFRS 6: Exploration for and evaluation of mineral resources
IFRS 7: Financial instruments: disclosures
IFRS 8: Operating segments
IFRS 9: Financial Instruments





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