alternative accounting rules


alternative accounting rules
Alternative rules for valuing certain assets under the Companies Act (1985). These rules modify the historical-cost convention. According to the modified rules intangible assets may be valued at current cost (with the exception of goodwill). Tangible fixed assets may be included at market value, determined as at their last valuation date, or at current cost. Fixed-asset investments may be valued at market value, determined as at their last valuation date, or at a value determined on any basis considered by the directors to be appropriate to the circumstances. Current-asset investments and stock may be included at current cost, unless the net realizable value is lower, in which case this must be used. Any permanent diminution in value must be provided for. Accounts prepared under the alternative accounting rules are described as being prepared under the modified historical-cost convention

Accounting dictionary. 2014.

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  • accounting — /euh kown ting/, n. 1. the theory and system of setting up, maintaining, and auditing the books of a firm; art of analyzing the financial position and operating results of a business house from a study of its sales, purchases, overhead, etc.… …   Universalium

  • historical-cost accounting — A system of accounting based primarily on the original costs incurred in a transaction. It is relaxed to some extent by such practices as the valuation of stock at the lower of cost and net realizable value and, in the UK, revaluation of fixed… …   Accounting dictionary

  • historical-cost accounting — A system of accounting based on the principle that assets should be valued at historical cost It is relaxed to some extent by such practices as the valuation of stock at the lower of cost and net realizable value and, in the UK, revaluation of… …   Big dictionary of business and management

  • asset classification — The classification of assets as required by law on a balance sheet. Assets must be classified as fixed (i.e. held for use on a continuing basis) or current (i.e. not intended for continuing use but held on a short term basis). Fixed assets are… …   Accounting dictionary

  • modified historical-cost convention — A modification of the historical cost convention in which certain assets are included at revalued amounts rather than their original cost. Modified historical cost accounting is permitted by the Companies Act. See: alternative accounting rules …   Accounting dictionary

  • balance-sheet asset value — The value of an asset as represented on the balance sheet. For tangible fixed assets this is the cost less accumulated depreciation (although freehold land is generally not subject to depreciation). Intangible assets are shown at cost less… …   Accounting dictionary

  • carrying amount — The balance sheet value of an asset or liability. For example, a fixed asset, such as a building, will be shown at the historical cost less the accumulated depreciation to date, using the historical cost convention. Under alternative accounting… …   Accounting dictionary

  • revaluation — An increase in the value of an asset to reflect its current market value. The asset cost account is debited and the revaluation reserve is credited. Under the alternative accounting rules, certain assets may be revalued …   Accounting dictionary

  • revaluation reserve account — asset revaluation reserve The reserve account to which the unrealized profit or loss on revaluation must be taken when the alternative accounting rules are used for the valuation of an asset. Companies have the option of choosing another name for …   Accounting dictionary

  • balance-sheet asset value — The value of an asset as represented on the balance sheet For tangible fixed assets this is the cost less accumulated depreciation (although freehold land is generally not subject to depreciation). Intangible assets are shown at cost less… …   Big dictionary of business and management