ACSOI, a non-standard accounting metric in the USA, treats marketing and customer acquisition costs as capital expenditures rather than operating expenses, which can inflate a company's net profit in the current accounting period.
Amortization is the process of gradually writing off the initial cost of an asset over a specific term or the repayment of debt in installments.
Amortization refers to the process of reducing debt through periodic payments or the systematic write-off of intangible asset costs over a set period.
Amortization refers to the process of spreading out a loan into a series of fixed payments over a specified period of time. Each payment covers both principal and interest, resulting in the gradual reduction of the loan balance.
The value of an asset as represented on the balance sheet, detailing how various types of assets are recorded considering depreciation, amortization, and valuation methods like fair value accounting.
A biweekly loan is a mortgage that requires principal and interest payments at two-week intervals. Each payment is exactly half of what a monthly payment would be. Over a year's time, the 26 payments are equivalent to 13 monthly payments, leading to faster amortization than a standard monthly payment mortgage.
A bond premium refers to the amount the purchaser pays in buying a bond that exceeds the face or call value of the bond. This premium can be amortized, reflecting the true interest rate being less than the coupon rate.
Brands, as intangible assets, play a crucial role in a company's strategic differentiation and financial performance. The accounting treatment of brands varies globally and has evolved to address the complexity in valuing and amortizing these assets.
Debt retirement refers to the repayment of outstanding debt, which is often achieved through mechanisms such as sinking funds, amortization, or prepayment. It is essential for managing corporate and personal finance efficiently.
A deferred charge is an intangible expenditure that is carried forward as an asset and amortized over the life of the benefit it represents. An example includes fees for arranging a 30-year mortgage on income-producing real estate.
Depreciation refers to the reduction in the value of an asset over time, often due to wear and tear. This accounting process allows businesses to allocate the cost of a tangible asset over its useful life.
A direct-reduction mortgage is a type of loan that requires both interest and principal to be paid with each installment, ensuring the loan is fully amortized by the end of its term.
Equity Buildup refers to the gradual increase in an owner's equity in mortgaged property, primarily caused by the amortization of the loan principal.
The equity method is an accounting technique used to record investments in associated undertakings, reflecting the investor's share of the investee's net assets and performance.
An expense is a business cost incurred in operating and maintaining property, used in profit-directed business activities and calculated as the cost of goods and services used. Expenses can be currently deductible costs, distinct from capital expenditures that must be depreciated or amortized over the property's useful life.
Fixed assets are long-term assets used in the operations of a business, such as land, buildings, machinery, and equipment. These assets are essential for production and business operations and are classified in various ways on the balance sheet.
Goodwill is an intangible asset reflecting a business's customer connections, reputation, and similar factors. It is the difference between the value of the separable net assets of a business and the total value of the business.
A Graduated Payment Mortgage (GPM) is a mortgage that starts with lower payments in the initial years, which gradually increase in steps over time until the payments are sufficient to amortize the loan fully.
Half-life in finance refers to the point in time at which half the principal has been repaid in a mortgage-backed security, including amortization and retirements.
The 'Installment to Amortize One Dollar' is a mathematically computed factor derived from compound interest functions. It offers the level periodic payment required to retire a $1 loan within a specified time frame, where the periodic installment rate must exceed the periodic interest rate.
Net Book Value (NBV) represents the carrying value of an asset on a company's balance sheet, calculated by subtracting accumulated depreciation or amortization from its original cost. It reflects the current value of a company's assets for accounting and investment decision purposes.
Organization costs are the expenditures a business incurs during its formation. These costs include legal fees, business filing fees, and franchise acquisition costs. Capitalization and amortization of organization costs are important aspects for financial and tax reporting.
Principal and Interest (P&I) refers to the two main components of a loan payment. The principal repayment decreases the loan balance, while the interest is the cost of borrowing the money.
The term 'Placed in Service' refers to the date when property is in a state of readiness and is available for a specific use. This is a critical concept in accounting and taxation, as it determines the start of depreciation or amortization for the asset.
A premium bond is a type of bond that sells for more than its face or redemption value. For example, if a bond with a face value of $1,000 sells for $1,050, it is considered a premium bond. The premium can be amortized on a straight-line basis over the life of the bond for tax purposes.
A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to amortization of the principal balance; commonly used with amortizing loans.
A type of mortgage commonly used in Canada in which the amortization of the principal is based on a long term, but the interest rate is established for a much shorter term. The loan may be extended, or rolled over, at the end of the shorter term at the current market interest rate.
A Self-Amortizing Mortgage is a mortgage designed to be paid off entirely through regular principal and interest payments over the loan term, without requiring a large lump sum payment at the end.
The unamortized bond discount represents the difference between a bond's face value (par value) and the proceeds received from the bond's sale by the issuing company, less the portion that has been amortized over time.
The unamortized cost is the historical cost of a fixed asset minus the total depreciation or amortization applied to it up to a specified date. It represents the current book value of the asset in financial accounting.
An unearned discount is an account on the books of a lending institution that recognizes interest deducted in advance from a loan. This interest will be taken into income as earned over the life of the loan.
Uniform Capitalization Rules (UNICAP) are a method of valuing inventory for tax purposes, requiring the capitalization of direct costs and an allocable portion of indirect costs related to production or resale activities. These costs must be included in the basis of property produced or in inventory costs and are then recoverable through depreciation, amortization, or as cost of goods sold.
The useful economic life, or useful life, is the period for which the present owner of an asset will derive economic benefits from its use.
Written-Down Value (WDV) refers to the depreciated value of an asset after accounting for depreciation or amortization up to a specific date. It represents the current book value of an asset in the financial statements.
