This 3 page paper examines a case study provided by the student answering question concerning the capitalization of organizational and set up costs for a fictitious company. The bibliography cites 1 source.
Name of Research Paper File: TS14_TEwendell.rtf
Unformatted Sample Text from the Research Paper:
business cost and deducted from the income on the profit and loss account where income and costs are all accounted for. The impact of this is that the cost is
gone and there is no future deduction to be made. In the short term this will decrease the profit by the greatest amount but can also be seen as a
conservative approach (Chadwick, 2001). If the investment is capitalised this means it is not taken to the profit and loss account, but it is treated as an investment creating
an asset. This means the level of assets on the balance sheet is increased. However, assets do not remain at the same value, so the when the costs are capitalised
they will then be depreciated or amortised, meaning a charge is then put to the profit and loss account each year. This perspective matches the matching convention. 2. Start up
costs may b self descriptive, they are the costs of starting up the business, these may include the initial advertising, the purchase of facilities, the initial training of the staff
etc. All the things needed for the company to start. Organizational costs are part of the start up costs, these are the costs for the setting up of the organizations,
such the registration costs for the limited company status, and in the case study this will include the legal fees. 3. Accounting needs to be based on the statutory framework
that is in place. Ion some instances there may not be a specific guidance note, under these circumstances there are several areas where accountant can look to for guidance, this
includes tax law where cases have been brought and the federal tax law is an appropriate source. 4. If we look at the sources of information that Cecelia is using