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How and Why Items are Presented on a Balance Sheet

What does it mean if the question states: Licenses are recorded net of accumulated amortization of $$$$$.

How would I figure out this: Notes receivable are due April 30, 2006 with interest receivable every april 30. notes bear interest at 12% (Hint: Accrue interest due on December 31, 2004.)

Where do the following fall on the balance sheet?

Short-term Investments in Stock
Cash Restricted for Plant Expansion
Allowance for Doubtful Accounts
Licenses

If you have allowance for doubtful accounts don't you also have bad debt in the liabilities section?

If there is inventory in Assets, shouldn't there be a material expense in the liability section?

And if you have accumulated depreciation, is there a depreciation expense listed in the liabilities section?

Solution Preview

1. Net of amortization means that the financial statement presentation (balance sheet) will only show one amount rather than showing the total cost of the asset less the amount that has been amortized over the accounting periods since the asset was purchased. Example: you bought something for $1000 and have been writing it off for years for a total amount of write-off of $600. The amount that will show in the column of numbers is $400, but parenthetically, the $600 will be stated in the narrative part so a reader can understand more about the asset.

2. Accruing interest on a note receivable must ...

Solution Summary

In the 420 word solution, detailed explanations are given to provide understanding of the concepts of assets and liabilities in the presentation of a balance sheet.

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