Income Statement

For example, maybe commission fees are higher than average in your area, or perhaps interest rates have gone up causing your home to spend longer than two months on the market. Though it is not an exact science, calculating net proceeds on a home sale is extremely useful. Doing so will help you determine whether or not you should list your house with an agent or consider an alternative.
For example, consider an investor (more…) […]

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In the example above, if Steve were to assume his 20% markup would yield a 20% margin, his net income would actually be 3.3% less than expected. While a 3.3% difference in net income may not seem like much, to many low-profit-margin businesses it can mean the difference between solvency or bankruptcy. A markup is an extra amount that a retailer adds to the cost of production when determining the customer-facing price of a product or service. Just like a margin, markup can be depicted as both a […]

Statement no. 130 requires that all items meeting the definition of components of comprehensive income be reported in a financial statement for the period in which they are recognized. Items that are required by accounting standards to be reported as direct adjustments to paid-in capital, retained earnings or other nonincome equity accounts are not to be included as components of comprehensive income. In the past, companies did not include these (more…) […]

If you combine these expenses, you do not need to support the business purpose of each expense. Instead, you can divide the expenses based on the total business use of the listed property. If your business use of the car had been less than 100% during any year, your depreciation deduction would have been less than the maximum amount allowable for that year. However, in figuring your unrecovered basis in the car, you would still reduce your basis by the maximum amount allowable as if the busines […]

Where materials or labor costs for a period fall short of or exceed the expected amount of standard costs, a variance is recorded. Such variances are then allocated among cost of goods sold and remaining inventory at the end of the period. Usually, the cost of foods sold will appear on the second line under the total revenue amount. Gross profit is typically listed below, since you calculate the gross profit by subtracting the cost (more…) […]

A capital lease is a contract entitling a renter the temporary use of an asset and, in accounting terms, has asset ownership characteristics. Salvage value is the estimated book value of an asset after depreciation. It is an important component in the calculation of a depreciation schedule.

The original cost of the asset is known as its gross cost, while the original cost of the asset less the amount of accumulated depreciation and any impairment is known as its net cost or carrying amount. Da […]

You’ll learn how to calculate NOPAT, and how the formula can be used to make better decisions from financial reporting insights. Return on invested capital is a way to assess a company’s efficiency at allocating the capital under its control to profitable investments. If, for example, a company has $100 of NOPAT but also has a $100 monthly interest payment, it looks unprofitable to an investor. In the US, fixed assets are often depreciated on a straight-line basis on the P&L bu […]

It is the total amount you as the employer owes the employee for work during one pay period. Gross pay includes regular hourly or salaried pay and it also includes any overtime paid to the worker during the pay period. Peter’s wages before taxes and deductions are his hourly pay plus his tips collected.
Read more about when overtime pay is required for salaried employees. The wage an employee is paid before taxes and deductions is their gross salary. Net salary is the pay an employee rece […]

Tax-loss harvesting and portfolio rebalancing are also a natural fit. In addition to keeping your portfolio aligned with your goals, a periodic rebalancing provides an opportunity to reexamine lagging investments that could be candidates for tax-loss harvesting. After you have decided which investments to sell to realize losses, you’ll have to determine what new investments, if any, to buy. Be careful, however, not to run afoul of the wash-sale rule. A tax haven or offshore (more…) […]