Business Administration 2257 Chapter Notes - Chapter 4: Financial Statement, Fixed Asset, Historical Cost

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: Baldwin Wallace

Document Summary

How should the effects of these economic events be measured in the financial statement: recognition, measurement. Well if i pay million for a building, that"s what i write it as. According to gaap you write it as the amount you paid otherwise on the financial statement you have a mixture of dollars and values. Under the new ifrs you can write up the value of your fixed asset to reflect a realizable value. Transactions recorded only on exchange of cash. If you get a bill and don"t pay it for 45 days, you record it when it"s paid. So it"s like that never occurred for 45 days. Transaction recorded when main economic event occurs. Exchange of cash is not the critical event. Occurs because of the accounting assumption related to time period. You record bills when you get them (debit lawyer expense and credit accounts payable) Paid (in cash) annual insurance bill - ,600 on aug 1, 2010.