In theory, the risk-free rate is the minimum return an investor expects for “delaying his consumption”. The investor will not accept any additional risk unless the potential rate of return is greater than the risk-free rate. Usually the government bond rate is used as the Risk free Rate. This raises several questions – which government, …
What is risk free rate? How will you calculate it for Afghanistan? Read More »
RETURN ON INVESTMENT ROI compares the profits of an investment compared to the cost of the investment to determine gains. RETURN ON CAPITAL EMPLOYED ROCE looks at earnings before interest and taxes (EBIT) compared to capital employed to determine how efficiently a firm uses capital to generate earnings. RETURN ON EQUITY Return on equity (ROE) …
What is the difference between ROI vs ROE vs ROCE. Read More »
Audit risk means the risk that the auditor might give an inappropriate audit opinion that Financial Statements are free from material misstatements when in fact the financial statements are materially misstated. Audit risk is a function of the risks of material misstatement and detection risk. Risk of material misstatement may be defined as the risk …
Q. We are setting up a factory of scooters, the scooters in this factory are sold for ā¹1 lakh. A Maintenance Contract for five years is also given for ā¹50,000. If the maintenance is paid at the time of purchase of scooters, a sum total of ā¹120,000 is charged from the customer. How to recognize …
It means that the company has acquired other entities for a consideration higher than Fair Market Value of Net Assets. Goodwill does not measure synergy, it measures how much I overpaid. So I will have to go into the specifics to know whether my Goodwill is justified. Goodwill ends up being impaired very frequently so …
This is one of the most commonly asked questions of all time, and irrespective of domain. It is as important as the “Tell me something about yourself question”. You must use all technical terms prescribed here and answer in the correct order 1. Identify the contract with the customer- ā¢ A contract is an agreement …
What is the 5 step model of recognizing Revenue as per IND AS 115? Read More »
Goodwill arises when a company acquires another entire business. The amount of goodwill is the purchase consideration of the business minus the fair market value of the net assets that can be identified, and the liabilities obtained in the purchase. Goodwill does not mean any of the following – companyās brand name, solid customer base, …
Suppose you see goodwill in the balance sheet. What does it mean? Read More »
