Author: David J Hoare MSA
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Amortization of Financing Costs
When a business acquires a loan there are typically closing costs involved. Generally Accepted Accounting Principles (GAAP) require these financing costs to be amortized (allocated) over the life of the loan. There are several principles the reader needs to understand to properly calculate and assign these costs to the financial statements. This lesson explains the basic business…
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Joint Venture
The average person may not realize this, but the most notable joint venture in existence today is the National Football League. It figuratively owns every Sunday in the fall of each year. It is an association of 32 clubs agreeing to compete with each other, i.e. engage in athletic entertainment. Each venturer is its own…
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Stock – Fundamentals of Ownership and Control
The basic principle of stock is an ownership right of a company based on the percentage of outstanding shares in possession. It is essentially a mutual understanding between shareholders that each investor’s percentage of ownership is similar in rights based on that percentage of ownership.
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Forms of Business Ownership
When an entrepreneur starts out on his/her long journey of building a legacy with his business; he/she almost immediately focuses on the legal status of his business. Thoughts include: ‘Should I become a limited liability company or an S-Corporation?’; ‘What if I take on partners?’; ‘How do I get more capital without giving up control?’
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Financial Leverage in Real Estate
Financial leverage refers to using a third party’s money to increase profit for the borrower. With real estate, the profit or equity in the property is the weight being lifted by the use of a lever (borrowing money) on the fulcrum (the property).
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Discounts – Various Meanings in Business
The term ‘discounts’ is a broad and varied meaning word when it comes to use in business. It literally has four distinct definitions. Each definition is used within a certain context of business. The first and most dollar expensive use is with original issue discount related to bonds in the market. The second use and most common is…
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Corporate Documents – Introduction
‘The job isn’t done until the paperwork is complete’, a popular axiom used especially in business. It identifies with the requirement that every corporate entity maintain its legal status and understanding between all investors and the management team. These understandings are the essence of the “formation” of the corporate entity. Failure to do the paperwork can…
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Aggregate and Entity Theories of Partnership
A partnership is defined as an association of two or more persons to carry on as co-owners a business for profit. The premise is built around the notion that the combined power of the partners exceeds the sum of the value the partners could generate independently.
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Economic Substance Principle
The taxpayer must prove that the underlying economic transaction was not concocted to avoid or reduce tax liability. In the Gregory Vs. Helvering case, the Supreme Court actually uses the word ‘sham’.
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Bookkeeping – Parent–Child Accounts (Lesson 17)
When one account is fed information from several sources based on function or location, this account structure is referred to as a ‘Parent-Child’ account.