This accounting principle can be explained by the construction of a new factory. The capitalized cost of the building asset can be added to its carrying value on the balance sheet. The cost of capitalizing an asset is identified...
What is notional value and how is it used in business
Notional value is a term used in business to describe the value of something that does not have a physical form. This can include intangible assets such as patents,...
The FIFO method requires the addition of a LIFO reserve to FIFO inventory. In order to benefit from the LIFO method, the firm must have higher net income and retained earnings than FIFO. The LIFO reserve will decrease when...
There are several differences between traditional linear and nonlinear regression. Classical assumptions are violated in nonlinear regression. In addition, the functional form is not linear, which violates the Gauss-Markov theorem. Nonlinear regression also violates the classical assumptions regarding dimensionality....
What is Moral Suasion
Moral suasion is a non-coercive approach to change somebody's behavior. The goal is to persuade them, using appeals to morality or reason, rather then force or threats. This can be done through public shaming, peer pressure,...
Price discovery is a process in the market whereby the market determines the price of an asset based on supply and demand. It helps reduce costs, improves liquidity, and facilitates purchasing decisions. During the discovery process, sellers and buyers...
What is Series 57 and what are its benefits
Series 57 is a type of professional securities license that entitles the holder to act as an investment banking advisor. The license is also known as the Limited Representative concentrated in...
What is annuitization and how does it work
Annuitization is the process of turning a lump sum of money into a stream of payments. This is usually done in retirement, when people want to ensure that they have a steady...
We can often reverse human processes without realizing it, such as when we wind a clock. This phenomenon, called the ratchet effect, is analogous to a mechanical ratchet holding a spring tightly as it winds up. The ratchet effect...
What is Form 6781 and what is it used for
Form 6781 is a document that is used to report gains and losses from commodities transactions. This form must be filed by individuals, partnerships, corporations, trusts, and estates. The purpose...