By strategically managing these investments, companies can balance the need for asset replacement with other financial priorities. When the time comes to replace the asset, the accumulated funds in the sinking fund account are used to purchase the new asset. The accounting entry for this transaction involves debiting the new asset account and crediting the...Read More
This is done by adjusting the balance sheet accounts according to the prevailing market conditions. The asset’s value then reflects the amount it can be exchanged for based on the current market prices. Consider a situation wherein a farmer takes a short position in 10 rice futures contracts. It is done in order Contracts for...Read More
