Institutional differences in accounting, Accounting, England, France

Journal Article The Early Use of "Capital" Get access Henry Rand Hatfield Henry Rand Hatfield University of California Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 49, Issue 1, November 1934, Pages 162–163, https://doi.org/10.2307/1883882 Published: 01 November 1934

Journal Article The Earliest Use in English of the Term Capital Get access Henry Rand Hatfield Henry Rand Hatfield University of California Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 40, Issue 3, May 1926, Pages 547–548, https://doi.org/10.2307/1885177 Published: 01 May 1926

The article focuses on the issue of the advisability of discarding an old, but still usable, machine, and substituting a newer model, one faces the necessity of writing off the book value of the obsolete machine. It is always disagreeable to write off an asset. The problem has not generally been discussed in accounting texts, which, for the most part, deal with the accounting for the abandoned value, whether it should be charged to surplus, added to the cost of the new machine, or charged against current income. But while the expediency of substituting a new model machine is a problem of management, rather than of accounting, occasionally an accountant transcends the too narrow limits of his own field and discusses factors which should be considered in deciding whether the change should be made. Among these are, the ability of the owner to provide funds for purchasing the new machine, the prophetic estimate that before long the price of the new machine will be substantially lowered, or that still further improvements may be expected in the near future, the effect on income taxes, or on dividends on noncumulative stock and a possible adverse influence on the credit of the corporation, if it shows a large write-off in respect of the abandoned asset.

Reviews the book "No Royal Road: Luca Pacioli and His Times," by R. Emmett Taylor.

The article focuses on operating deficit and paid-in surplus. There are two distinct but closely allied problems in connection with the relation of operating deficits and dividends. The first is whether dividends may be paid from subsequent profits despite the existence on the books of an operating deficit. This question has been answered in both ways by statutory provisions and by accountants. If the answer is in favor of allowing dividends despite a previous operating deficit, the second question is immaterial. But if it is held that dividends may not be paid out of subsequent earnings in face of an existing operating deficit shown on the books, there still remains the second question. In estimating the net profits available for dividends, must the deficits of a past year be carried over to the profit and loss account of the following year or may a past operating deficit be removed through charging it against paid-in surplus, so that the deficit has no effect on the showing of profits available for dividends in subsequent years.

Reviews the book "How to Understand Accounting," by Howard C. Greer.

Reviews the book "Goodwill and Other Intangibles," by J.M. Yang.