What is the difference between income which is "realized" and income which is "recognized"? Which respect to gains/losses from Capital Assets like equity securities (stock), at what point is the gain realized and when is it currently recognized?
What is the difference between income which is "realized" and income which is "recognized"? Which respect to gains/losses from Capital Assets like equity securities (stock), at what point is the gain realized and when is it currently recognized?
What is the difference between income which is "realized" and income which is "recognized"? Which respect to gains/losses from Capital Assets like equity securities (stock), at what point is the gain realized and when is it currently recognized?
What is the difference between income which is "realized" and income which is "recognized"? Which respect to gains/losses from Capital Assets like equity securities (stock), at what point is the gain realized and when is it currently recognized?
Rules by which an authority (usually a government) imposes a financial obligation on individuals or organizations within its domain. Property or transactions can be taxed. While taxes are primarily intended to fund the operation of a government, many tax laws are created to encourage or discourage certain behaviors by citizens or companies.
Expert Solution
Step 1 - Introduction
Financial accounting requires to report all the income and expenses on the books and compute the income for the period. Similarly, accounting for tax purpose also requires to report the income and expenses of the financial transactions and compute the income for the taxation purpose.
If the total sale value is more than the cost of the sold asset, there is a gain from the transaction. Similarly, if the cost of the sold asset was more than the sale value, there is a loss from the transaction.
