Book vs. economic value: Posting
Book value is what is paid for an asset; economic value is what can actually be obtained for the asset in actual, current market terms. A good example of an asset with relatively close book and economic value would be land. Although the real estate market goes through highs and lows, in general the value of land does not depreciate over the long-term like a piece of equipment. In contrast, the purchase of a piece of technology such as hardware or software as an asset demonstrates a wide discrepancy between book and economic value given that new computer systems are being developed all the time and technology very quickly becomes obsolete. Unlike land, no matter how well-maintained a piece of equipment might be, depreciation is an inevitable consequence of purchasing such an asset and the value of a piece of technology will literally go down as soon as the asset is purchased. Even the most advanced smartphone from a few years ago is considered ancient in technological terms.
A liability with close book and economic values would be a fixed rate mortgage on a piece of property that did not change, regardless of the interest rate. In contrast, a liability with a different economic value would be that of a warranty liability,...
leasing assets vs. buying. The question of whether to buy an asset or to lease an asset is quite complex. Indeed, the answer is not always a black and white, straight response. Often, there is a grey area when researching whether to purchase or lease. For instance, if one wishes to purchase a house and live within the residence for two years, the residence can then be rented out and
GAAP vs. IFRS As globalization begins to hit full stride, new rules and customs must be addressed with older and more established practices. The International Financial Reporting Standards (IFRS) represents a global perspective on the accounting rules for global organization. The United States has followed their Generally Accepted Accounting Principles (U.S. GAAP) to dictate the regulations dealing with domestic companies. The purpose of this essay is to examine both of these
STI vs. USB The capital accounts for the two banks reveal a significant difference in the price-to-book ratios. Suntrust Banks has an equity value that is higher than the market cap of the company, a favorable price-to-book ratio that implies the company is undervalued on the market. U.S. Bancorp has a more typical price-to-book ratio where the market value of the firm is higher than the book value. Part of this
COCA-COLA vs. PEPSICO COMPANY Company Financial Comparative Study Coca-Cola Company and Pepsi Incorporation are beverage-producing companies worldwide. Over the years, people have had different opinions and ideas about the two companies, although their products are meant to serve the same purpose. Both plants have sub-plants, although Coca-Cola Company has its sub-plants worldwide. Pepsi Company has managed to set plants in specified regions, which serve as strong hold of the company. Pension plans
Finance Comparing Nike vs. Adidas Finances What is the companies product or service? Nike -- Nike is in the sporting goods industry and produces shoes, clothes, and sporting goods. Adidas -- Adidas is in the sporting goods industry and provides "state-of-the-art sports footwear, apparel and accessories" (Adidas, What We Do). When was the company established? Nike -- Nike was established in 1962 under the name Blue Ribbon Sports, with the name being changed to Nike in
FIFO vs. LIFO What are the different methods of inventory valuation? Inventory valuation is a very important component to company financial statements. For one, capital intensive companies tend to have higher levels of inventory due to their overall business operations. Manufacturing company's, for instance may have large inventory holdings as goods are classified into "finished goods inventory," or "partial inventory." Retail companies also tend to have large amounts of inventory to cater
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