Capitalized Cost

Capitalized costs are those expenses that are incurred in building or financing

 a fixed asset. Examples of capitalized costs include labor expenses incurred in 

building a fixed asset or interest expenses incurred as a result of financing the

 construction of a fixed asset. For accountingpurposes, those expenses are

 capitalized, or added to the cost of the asset. They are not deducted from 

revenue in the period in which they were incurred. Instead, capitalized costs 

are deducted from revenues over time through depreciation, depletion,

 or amortization.

Mountain

A mountain is a large landform that stretches above the surrounding land in a limited area 
usually in the form of a peak. A mountain is generally steeper than a hill. 
The adjective montane is used to describe mountainous areas and things associated 
with them. The study of mountains is called-orography.

The Matterhorn, Swiss Alps

Five Finger Mountain, Azerbaijan

Mount Olympus in Greece

Left to right: Mount Everest, Lhotseand Ama Dablam in the Himalayas

Mount Kilimanjaro, 5,895 metres (19,341 ft), Tanzania

Biggest River in the world

The Amazon river runs 4,000 miles from the Andes to the sea, and is longer than any river but the Nile. The Amazon River is therefore the second longest river in the world. It is also the largest in terms of the size of its watershed, the number of tributaries, and the volume of water discharged into the sea. The vast Amazon basin covers more than two and a half million square miles, more than any other rainforests. No bridge crosses the river along its entire length.

  Continent                                                    South America


 Countries it Flows Through                        Peru, Brazil, Venezuela, Ecuador, Bolivia

 Length                                                         6400 kilometres (4,000 miles)

 Numbers OF Tributaries                            Over 200

 Source                                                         Lago Villafro in the Andes Mountains, Peru

 Mouth                                                          Brazil into the Atlantic Ocean (delta)

 Basin                                                            7,050,000 km² (2,720,000 sq mi) approx.

 Discharge
 Average                                                        Brazil into the Atlantic Ocean (delta)

Mouths of the Amazon River, Brazil, South America

Mouth of Amazon River, Brazil as seen from the Gemini 9-A spacecraft

Amazon River, Brazil, South America

Confluence of the Amazon and Tapajos Rivers, Brazil, South America

piru primery city in the amazon region

So it's time to get on a boat, any boat with a mo

  toheaPublcfor your Amazon rainforest

dAmazon Forest Iphone Wallpapers

Longest River In the World

The Nile is famous as the longest river in the world. The river got its name from the Greek word Neilos, which means valley. The Nile floods the lands in Egypt, leaving behind black sediment. That's why the ancient Egyptians named the river Ar, meaning black.

River	Length (Km)	Length (Miles)	Drainage Area (Km2)	Average Discharge m/s	Outflow	Countries in the drainage basin
Nile	6650	4132	3,349,000	5100	Mediterranean Sea	Ethiopia, Eritrea, Sudan, Uganda, Tanzania, Kenya, Rwanda, Burundi, Egypt, Democratic Republic of the Congo

                Nile in Egypt

The Blue Nile Falls fed by Lake Tana near the city of Bahir Dar, Ethiopia.

The confluence of the Kagera and Ruvubu rivers near Rusumo Falls, part of the Nile's upper reaches.

Dhows on the Nile 

Map of Nile River

Nile River Delta at Night

One of the fascinating aspects of viewing Earth at night is how well the lights show the

distribution of people. In this view of Egypt, the population is shown to be almost 

completely concentrated along the Nile Valley, just a small percentage

of the country’s land area.

Nile Monitor

Smallest Country In The World

Vatican City - 0.2 square miles - The world's smallest state, the Vatican has a population of 770, none of whom are permanent residents. The tiny country which surrounds St. Peter's Basilica is the spiritual center for the world's Roman Catholics (over 1 billion strong). Also known as the Holy See, Vatican City is surrounded by Rome, Italy.

The Vatican City, officially called The Holy See, is the smallest country in the world and is located within a walled area of the Italian capital city of Rome. Its area is only about .17 square miles (.44 square km) and it has a July 2009 population estimate of 826, but many more commute into the area for work. The Vatican City officially came into existence in 1929 after the Lateran Treaty with Italy. Its government type is considered ecclesiastical and its chief of state is the Catholic Pope, Pope Vatican Museum    Vatican Gardens Catican From The Tiber River   St. Peter's Basilica rooftop statues, Vatican The main street that runs to the Vatican is called the Via della Conciliazione. Visitors to Rome can enjoy a fabulous view of St. Peter's Cathedral from this attractive street.     Vatican City is surrounded by a fortress which, over the years, protected the pope      from his enemies. A tunnel connects Vatican City to Castel Saint'Angelo and was      used as an escape route during turbulent times.

Bad Debts

A bad debt is an amount that is written off by the business as a loss to the business and classified as an expense because the debt owed to the business is unable to be collected, and all reasonable efforts have been exhausted to collect the amount owed.

A person or company who is not expected to pay his debt; for example, because the company has gone into liquidation. Bad debts must be written-off and therefore they will reduce profit.

A bad debt becomes a bad debt when a business decides it is one, this decision is often based on past experience.  Decisions are made by keeping a list of all debtors (aged debtors), and reviewing this list periodically.

If a business is having difficulties collecting money owed from one of its customers it may decide to cancel the debt.  This is called a write-off and the accounts would need to be adjusted for this write-off.

A Bad Debt account would need to be set up and this would be an expense account.

To account for a bad debt there are in fact three transactions involved:

You would debit the Bad Debt account with the Net amount

Debit the VAT account with the VAT amount

Credit the Debtors Control account with the Gross amount

This type of transaction would affect both the profit and loss, and the balance sheet.  The profit and loss would show the bad debt as an expense as this is money owed by a customer that cannot be collected.

The transaction has previously processed as a debit to the Debtors Control account.  As it is money that can no longer be collected, you would reverse this by making a credit to the Debtors Control account.

A list of customers accounts are usually kept called Aged Debtors Control.  A decision to write-off a bad debt would be made by reviewing the Aged Debtors/Debtors Control.

Methods of Valuation of Goodwill

The following are the methods of valuation of goodwill of a firm: - #
1. Average Profit Method
2. Weighted Average Profit Method
3. Super Profit Method
4. Capitalization of Average Profit Method
5. Capitalization of Super Profit Method
6. Present Value of Super Profits
Method 1. Average Profit Method: Under this method goodwill is calculated on the basis of the average profit of previous years. The average profit is multiplied by the number of year's purchase. Goodwill = Average Profit x Number of Years Purchase Example: Calculate goodwill at twice the average profits of last four years' profits. The profits of the last four years were: # # Rs. 27,000 # Rs. 39,000 # Rs. 16,000 (Loss) # Rs. 40,000 Solution: Total Profit for last four years = Rs. 27,000+ Rs. 39,000-Rs. 16,000+Rs. 40,000 = Rs. 80,000 Average Profit = Rs. 80,000/4 = Rs. 20,000. Goodwill = Rs. 20,000 x 2 = Rs. 40,000.
Method 2. Weighted Average Profit Method: This method is a modified version of the average profit method. Under this method the respective number of weights i.e. 1,2,3,4 multiplies profit of every year, in order to find out value product and the total of products is then divided by the total of weights in order to ascertain the weighted average profits. Goodwill = Weighted Average Profits x No. of years Purchase Weighted Average Profit = Total of Products of Profits/ Total of Weights Example: Calculate goodwill at twice the weighted average profits of last four years' profits. The profits of the last four years were:
2001. Rs. 37,000
2002. Rs. 29,000
2003. Rs. 26,000
2004. Rs. 40,000
Solution:
Years Profits Rs. Weight Product Rs.
2001 37,000 1 37,000
2002 29,000 2 58,000
2003 26,000 3 78,000
2004 40,000 4 160,000
Total 10 333,000
Weighted Average Profit = Rs. 333,000/10 = Rs. 33,300 Goodwill = Rs. 33,300 x 2 = Rs. 66,600
Method 3. Super Profit Method: When the actual profit is more than the expected profit or normal profit of a firm, it is called 'Super Profit.' Under this method goodwill is to be calculate of on the following manner: Goodwill = Super Profit x Number of Years Purchase Example: The books of a business showed that the capital employed on January 1, 2001 was Rs. 4,50,000 and the profits for the last five years were as follows: 2001-Rs. 40,000; 2002 -Rs. 50,000; 2003 - Rs. 60,000; 2004 -Rs. 70,000 and 2005 -Rs. 80,000. You are required to find out the value of goodwill, based on three years' purchase of the super profit of the business given that the normal rate of return is 10%. Solution: Total Profit of last five years = Rs. 40,000 + Rs. 50,000 + Rs. 60,000 + Rs. 70,000 + Rs. 80,000 = Rs. 300,000 Average Profit = Rs. 300,000/5 =Rs. 60,000 Normal Profit = Rs. 450,000 x 10/100 = Rs. 45,000 Super Profit = Actual/Average Profit - Normal Profit Super Profit = Rs. 60,000 - Rs. 45,000 = Rs. 15,000 Goodwill = Rs. 15,000 x 3 = Rs. 45,000.
Method 4. Capitalization of Average Profit Method: Under this method goodwill is difference between the total Capitalized value of the firm and the net assets of the firm. Goodwill = Capitalized Value the firm - Net Assets Capitalized Value of the firm = Average Profit x 100/ Normal Rate of Return Net Assets = Total Assets - External Liabilities Example: A firm earns Rs. 65,000 as its average profits. The usual rate of earning is 10%. The total assets of the firm amounted to Rs. 680,000 and liabilities are Rs. 180,000. Calculate the value of goodwill. Solution : Total Capitalized value of the firm = Rs. 65,000 x 100/10 = Rs. 650,000 Net Assets = Rs. 680,000 - Rs. 180,000 = Rs. 500,000 Goodwill = Total Capitalized value of the firm - Net Assets Goodwill = Rs. 650,000 - Rs. 500,000 = Rs. 150,000.
Method 5. Capitalization of Super Profit Method: # # Calculate Capitalized value of the firm # Calculate required profit on capital employed by using the following formula: Normal Profit = Capital Employed x Required Rate of Return/100 # # Calculate average profit # Calculate super profit Goodwill = Super Profit x 100/Normal Rate of Return Example: Verma Brothers earn a profit of Rs. 90,000 with a capital of Rs. 4,00,000. The normal rate of return in the business is 15%. Use Capitalization of super profit method to value the goodwill. Solution: Normal Profit = Rs. 4,00,000 x 15/100 = Rs. 60,000 Super Profit = Rs. 90,000 - Rs. 60,000 = Rs. 30,000 Goodwill = Super Profit x 100/Normal Rate of Return = Rs. 30,000 x 100/15 = Rs. 200,000
Method 6. Present Value of Super Profit: Under this method, goodwill is estimated as the present value of the future super profits. The following steps are taken: # # Calculate the future super profits for next years # Choose the required rate of return # Calculate present value factors # Multiply present value factors with future super profits # The sum of product of present value factors and super profits is the value of goodwill. Example: A firm has the forecasted profits for the coming 4 years as follows:
Years Profits Rs.
1 80,000
2 100,000
3 90,000
4 120,000
The total assets of the firm are Rs. 900,000 and outside liabilities are Rs. 300,000. The present value factors at 10% are as follows:
Years Present Value Factor
1 .9279
2 .8029
3 .7056
4 .6978
Calculate the Value of goodwill. Solution: Net Assets = Total Assets - Liabilities = Rs. 900,000 - Rs. 300,000 = Rs. 600,000
Normal Profit = 10/100 x Rs. 600,000 = Rs. 60,000
Years
1
2
3
4
Profits (Rs.)
80,000
100,000
90,000
120,000
Normal Profit
60,000
60,000
60,000
60,000
Super Profit
20,000
40,000
30,000
60,000
Present Value Factor
0.9279
0.8029
0.7056
0.6978
Present Value of Super Profit
18,558
32,116
21,168
41,868
Goodwill = Rs. 18,558 + Rs. 32,116 + Rs. 21,168 + Rs. 41,868 = Rs. 113,710.

Goodwill

Goodwill in financial matters is the value of an entity over and above the value of its assets. The term was originally used in accounting to express the intangible but quantifiable "prudent value" of an ongoing business beyond its assets, resulting perhaps from the reputation the firm enjoyed with its clients.

Goodwill in financial statements arises when a company is purchased for more than the fair value of the identifiable assets of the company. The difference between the purchase price and the sum of the fair value of the net assets is by definition the value of the "goodwill" of the purchased company.

There is a distinction between two types of goodwill depending upon the type of business enterprise: institutional goodwill and professional practice goodwill. Furthermore, goodwill in a professional practice entity may be attributed to the practice itself and to the professional practitioner.[2]

It should also be noted that while goodwill is technically an intangible asset, goodwill and intangible assets are usually listed as separate items on a company's balance sheet.[3][4]

Goodwill is an intangible asset. It is usually described as the difference between the sales price of a company and the value of its tangible assets. Goodwill is based on the company's reputation and customer loyalty.

Method Of Bank Reconciliation

 Prepare the bank reconciliation statement reconciling the bank statement
 balance with the correct cash book                                      
 balance in either of the following two ways:

 (i)  First method (Starting with the cash book balance) 

 (ii) Second method (Starting with the bank statement balance)

  First Method (Starting With the Cash Book Balance):

(a) If the cash balance is a debit balance, deduct from it all cheques, drafts etc., paid into
 the bank but not collected and credited by the bank and added to it all cheques drawn on the
 bank but not yet presented for payment. The new balance will agree with bank statement.

(b) If the bank balance of the cash book is a credit balance (overdraft), add to it all
cheques, drafts, etc., paid into the bank but not collected by the bank and deduct from it
all cheques drawn on the bank but not yet presented for payment. The new balance will
then agree with the balance of the bank statement.

Second Method (Starting With the Bank Statement Balance):

(a) If the bank statement balance is a debit balance (an overdraft), deduct from it all cheques,
   drafts, etc., paid into bank but not collected and credited by the bank and add to it all cheques
   drawn on the bank but not yet presented for payment. The new balance will then be agree with
    the balance of the cash book.

(b) If the bank statement balance is a credit balance (in favor of the depositor), add to it all
cheques, drafts, etc., paid into the bank but not collected and credited by the bank and deduct
from it all cheques drawn on the bank but not yet presented for payment. The new balance will agree
 with the balance of the cash book.

Bank Reconciliation

A Bank reconciliation is a process that explains the difference between the bank balance shown in an      organisation's bank statement, as supplied by the bank, and the corresponding amount shown in the organisation's own accounting records at a particular point in time.

Causes of Disagreement Between Bank statement and Cash book:

1. That our banker might have allowed interest which have not yet been entered in our cash book.
2. That our banker might have debited our account for any such item as interest on overdraft,
   commission for collecting cheque, incidental charges etc., which we have not entered in the
   cash book.
3. That some of the cheque which we drew and for which we credited our bank account prior to
    the date of closing, were not presented at the bank and therefore, not debited in the
    bank statement.
4. That some cheques or drafts which we have paid into bank for collection and for which we 
   debited our bank account, were not realised within the due date of closing and therefore, 
    not credited by the bank.
5. The banker might have credited our account with amount of a bill of exchange or any other 
   direct payment into bank and the same may not have been entered in the cash book.
6. That cheques dishonoured might have been debited in the bank statement but have
     not been given effect to in our books.

   How to Prepare a Bank Reconciliation Statement:

  
To prepare the bank reconciliation statement, the following rules may be useful for the students:

1. Check the cash book receipts and payments against the bank statement.
2. Items not ticked on either side of the cash book will represent those which have not yet passed
    through the bank statement.
3. Make a list of these items.
4. Items not ticked on either side of the bank statement will represent those which have not yet
   been passed through the cash book.
5. Make a list of these items.
6. Adjust the cash book by recording therein those items which do not appear in it but which are
   found in the bank statement, thus computing the correct balance of the cash book.