What is meant by the terms unexpired cost and expired cost?
Basically, when a cost is incurred, it could be in the form of deferred cost (asset) or expired cost (expense). Deferred costs are unexpired cost which provide benefit in the future periods. They are capitalised costs and known as assets and hence appear on the balance sheet.
What does unexpired mean?
: not yet run out : still valid or in effect : not terminated or expired an unexpired lease/patent unexpired medicine [=medicine that has not yet reached its expiration date]
What is the unexpired cost of a plant asset?
Question: The unexpired cost of a plant asset is referred to as its depreciable cost carrying value accumulated depreciation original cost.
What is unexpired revenue?
Unexpired Cost = Cost of Asset – Revenue Generated from Asset to date. Technically, it is the balance of an expense item that has not been written off to the income statement because it still has some remaining value. It is applicable to all costs including the cost of inventory, deferred costs, and prepaid costs.
Which is the best definition of unexpired cost?
An unexpired cost is any cost that has not yet been charged to expense because it still represents some residual value. This cost is frequently associated with revenue that has not yet been recognized; under the matching principle, an unexpired cost is maintained on the books as an asset until the associated revenue is…
What does it mean when an asset has an expired cost?
An asset that has an expired cost for too long or never recovers its initial cost represents a bad investment. Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved Want to thank TFD for its existence? Tell a friend about us, add a link to this page, or visit the webmaster’s page for free fun content .
When does an expired cost become a loss?
This happens when an entity fully consumes or receives benefit from a cost (sometimes resulting in the generation of revenue ). An expired cost may also be construed as the total loss in value of an asset.
When does$ 10, 000 become an expired cost?
The $10,000 becomes an expired cost in March. As another example, a company pays $100 for office supplies in June. Though the supplies may not be used for several months, it is not worth the time of the accounting staff to recognize such a small cost over several reporting periods.
