The two main company structures
Propriety Companies, Public Companies
The four types of public company
Companies where capital is limited by shares, companies where share capital is limited by guarantee, no-liability companies, unlimited share capital companies.
The two types of share
Ordinary shares, preference shares.
The advantages of companies as a business structure
Limited liability, separate legal entity, can gain capital via selling shares.
The disadvantages of companies as a business structure
More expensive and difficult to establish, must comply with more legal acts, subject to company tax, owners get little say in the company's direction.
The two types of trust
Family trusts, Unit trusts.
The advantages of trusts as a business structure
Minimal tax payments, limited liability, little regulation (unless they are listed on the ASX).
The disadvantages of trusts as a business structure
Additional complex laws apply, they require suitable, qualified accountants to run.
Original documents that verify the transaction
The ability of an entity to meet its short term financial commitments
Recognition criteria of assets/liabilities
The future economic benefits/outflows must be probably, and they must be able to be measured reliably.
A liability where the result depends on a future event.
Paid up share capital
The amount payed in by shareholders for shares in the company.
Minority interests in controlled entities
Claims on the net assets that belong to the shareholders of controlled entities.
Net realizable value
Expected selling price minus expected costs of getting the inventory to a saleable state.
Net market value
Amount gained from selling an asset minus the costs associated with selling it.
Value in use
Present value of expect cash flows from the asset's use and subsequent disposal.
The expense incurred when the carrying value of an asset exceeds the recoverable amount.
The original cost of an asset.
The cost of replacing an asset.
Expected cash from selling an asset.
Sum of discounted cash flows from an asset.
How much the asset could be exchanged for between parties at arm's length.