According to the text, Accounting Rate of Return is a simple accounting method of rating capital expenditures. Reportedly, Accounting Rate of Return is computed as a percentage of average annual profits to the average investment in the project, where Average Investment equals half of the net investment.
The nature of the transaction determines where the item will end up on the balance sheet. Financial derivatives are not reported on the balance sheet. Bonds held are shown in assets. Foreign currency reserves are shown in assets, same as equity held for trading and till maturity. All borrowing facilities are listed under the liabilities section.
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