Guidance and Knowledge for Value Investors
Transportation as used in business is a term reflecting costs tied to tractors, trailers, trucks, autos, and other forms of transportation items (aircraft, marine, and rail cars). Depending on the nature of the particular industry, transportation costs may be assigned to cost of sales or in the overhead section of the income statement.
Volatility is necessary to create market fluctuations. Market fluctuations create price disparity for either intrinsic value (buy side of the buy low/sell high tenet of value investing) or price recovery, i.e. unsubstantiated high market prices for stock. The COVID scare is causing the stock market to suddenly drop across the board for all stocks. This provides opportunities to buy low and simply wait for market recovery to sell.
There is much more to transportation with bookkeeping than accounting for vehicle operations, addressing mileage reimbursements or tracking auto costs related to owners and family members. Bookkeepers must track the following too:
Some small businesses manage transportation costs in incremental payments by utilizing mileage reimbursement. It is a very advantageous system if used correctly. Other small businesses augment their existing vehicle fleet by paying employees via mileage reimbursement for the use of the employee’s automobile.
On December 10, 2014, the Internal Revenue Service announced the mileage rate deduction for 2015. They increased the amount allowed 1.5 cents to 57.5 cents per mile. How do you calculate and use the mileage rate formula for tax purposes?
In any industry, especially transportation, it is essential for the owner of a business to understand how much it costs per mile to operate his vehicle, trucks or fleet. The formula looks simple and in reality it is; but you must understand the underlying elements to truly appreciate and comprehend the calculation.
The fixed assets section of the balance sheet is one of the easiest sections to read and understand. This article is written to describe and illustrate some simple examples of the fixed assets section.