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July 07, 2020, 04:25:57 am

Author Topic: Contribution of Asset by Owner  (Read 348 times)  Share 

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Seamus Wong

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Contribution of Asset by Owner
« on: November 04, 2019, 09:04:40 pm »
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What are the key points that we need to include when talking about why we use the AGREED value as opposed to the HISTORICAL cost when an asset is contributed to the business by the owner?

2018-2019
[Business Management] [Methods]
[Accounting] [Algorithmics] [Economics] [English Language]

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2020-2023
Monash Uni - Bachelor of Commerce (Finance) / Bachelor of CompSci (Data Science)

jnlfs2010

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Re: Contribution of Asset by Owner
« Reply #1 on: November 04, 2019, 09:48:18 pm »
+1
QCs- Faithful representation, Relevance
Assumptions- Entity

This is for noncash assets like vans and stuff.

1. accurate representation of economic benefit to be received by the business (faithful representation) and ensure assets are not overstated and nor is the owner's equity (some may have been consumed by the owner). This is done by comparing similar assets in the market of similar use and age
2. This valuation represents the economic benefit to be received by the business which is more relevant for decision making and will better assist decision making for the BUSINESS
3. The cost price is relevant to decision making for the owner and not for the business. We are accounting for the business which is a separate entity, therefore the fair value is used

[I'm not perfect if I make any mistakes or are insufficient please do correct me]
VCE:
2019: Accounting [45]
2020: English, Economics, Specialist Mathematics, Mathematical Methods, Chemistry

Seamus Wong

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Re: Contribution of Asset by Owner
« Reply #2 on: November 04, 2019, 10:13:40 pm »
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QCs- Faithful representation, Relevance
Assumptions- Entity

This is for noncash assets like vans and stuff.

1. accurate representation of economic benefit to be received by the business (faithful representation) and ensure assets are not overstated and nor is the owner's equity (some may have been consumed by the owner). This is done by comparing similar assets in the market of similar use and age
2. This valuation represents the economic benefit to be received by the business which is more relevant for decision making and will better assist decision making for the BUSINESS
3. The cost price is relevant to decision making for the owner and not for the business. We are accounting for the business which is a separate entity, therefore the fair value is used

[I'm not perfect if I make any mistakes or are insufficient please do correct me]

Thanks a lot, I think you covered most of what is necessary
2018-2019
[Business Management] [Methods]
[Accounting] [Algorithmics] [Economics] [English Language]

ATAR: 97.65


2020-2023
Monash Uni - Bachelor of Commerce (Finance) / Bachelor of CompSci (Data Science)