Monday, November 15, 2010

Why is Capital Expenditure treated as an Asset?

A capital expenditure is treated as an asset because it adds to the value of an existing fixed asset that the company holds with a useful life extending beyond the taxable year. This actually means that there will be an increase in future economic benefits provided by the expenditure and that the company can use depreciation methods to reduce its costs on the balance sheet.

This distinction is very important in income tax law and will affect how an account records a capital expenditure to the tax authorities.

Wednesday, November 3, 2010

Activity Based Management ABM

What is Activity Based Management (ABM)?

Activity Based Management (ABM)  converts Activity Based Costing (ABC) into an easier system to manage an organizations production costs. Activity Based Management (ABM)  focuses on more that just product, service, customer, and channel costing.

This type of costing also strongly  emphasizes: cost drivers, action plans to improve to achieve strategic objectives, and, performance measures for activities and certain processes.

Popular Accounting Problems

The information on this site is for informational purposes only and should not be used as a substitute for the professional advice of an accountant, tax advisor, attorney, or other professional.