Subsidiary Accounting Important Accounting Changes When Company A the investor has significant influence over Company B the investee —but not majority voting power—Company A accounts for its investment in Company B using the equity method of accounting. Company B is considered an unconsolidated subsidiary of Company A in such circumstances, from Company A's perspective, but could be a freestanding, publicly traded corporation.
The extent to which seasonality may affect a business depends upon a number of different factors. All businesses have cycles.
The length of a cycle can be exceptionally short for some businesses -- to the point that they appear to be unaffected by long-term seasonal cycles. Others must face the prospect of longer droughts, for which they must prepare.
Labor Patterns Seasonality has an effect on the labor supply in businesses dependent upon the calendar.
For instance, in the retail industry, businesses must hire greater numbers of workers during the Christmas season to handle the extra work that comes with holiday sales. The same is true during peak months of the tourist industry in various locations throughout the country. Seasonality can put considerable stress and strain on managers who must account for any shortages in the labor force.
Working Capital The amount of working capital that a company must maintain is also affected by seasonality. During periods of peak productivity, the amount of working capital that a company maintains will generally be higher to cover increased operating expenses.
Depending upon the nature of the industry though, some of that working capital may have to be put in reserve when business and cash flow slow down.
Time The element of time is another dimension of business operations related to seasonality. During periods of peak business activity, the amount of time that a business owner or manager has to plan for future operations will be limited. However, during periods of significant slowdowns, those with seasonal businesses can use those slower periods as an opportunity to plan for future operations.
Effort For salespeople who depend upon their own production, seasonality can affect the amount of money they can expect to make at any given time during the year. Paul Oyer in the Department of Economics at Princeton University notes that salespeople will often adjust their effort levels according to the seasonality of their business, saving their maximum effort for those periods in which profitability is known to be the highest.
For instance, automobile salespeople will experience higher sales peaks during the spring and summer months. During these months, they may maximize their sales efforts and spend the colder winter months putting more effort into marketing and networking.IntroductionOver the last decade numerous accounting papers investigate the empirical relation between stock market values (or changes in values) and particular accounting numbers for the purpose of assessing or providing a basis of assessing those numbers’ use or proposed use in an accounting .
Current Accounting and Disclosure Issues August 31, Prepared by Accounting Staff Members in the Division of Corporation Finance conversion terms compared to the IPO price are presumed to result in additional compensation or other expense to the extent of the difference between the IPO price and the conversion price.
The . The prudence concept, also known as the conservatism principle, is an accounting principle that requires an accountant to record liabilities and expenses as soon as they occur, but revenues only when they are assured or realized.
The prudence concept requires the accountants to be cautious in the.
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Research Report To what extent does an accounting or business degree equip graduates with the knowledge and skills required by . Equity method of accounting for acquisitions. Cash taxes are paid by the investor only on cash dividends received. The undistributed earnings give rise to a deferred tax liability ("DTL") payable when the earnings are ultimately distributed, or the investment is liquidated.