VALUATION AND AMORTIZATION.
Many accountants appear to have no very definite notion of what a balance sheet is. Forthright opinions on the subject are rare; by inference, however, two main trends of thought may be distinguished, one of which is based on the capital-value or property concept and the other on the investment or amount-of-money-advanced concept. The former is exemplified by the so-called fundamental equation: Assets minus liabilities equal net worth. Numerous remarks on the subject of accounting valuations clearly show that their authors were guided at least temporarily by the idea that a balance sheet is or ought to be a statement of the worth of the business. This comment applies to all who would write up good will not purchased or who hold that, if purchased, it need not be amortized until it is actually worth less than it cost. That patents need not be amortized, because they are, in time, supplanted by good will, and that if a company's stock is quoted at a discount, its balance sheet must be inflated, are further samples of the same trend of thought.
- DOI
- 10.2308/tar-7082692
- Volume
- 12 (3)
- Pages
- 209-226
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref