COST CONTROL Definition

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COST CONTROL is the process of controlling the cost of a project within a predetermined sum throughout its various stages from inception to completion.

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MODIFIED ACCRUAL BASIS accounting is a mixture of the cash and accrual basis. The modified accrual basis should be used for governmental funds. To be recognized as a revenue or expenditure, the actual receipt or disbursal of cash must occur soon enough after a transaction or event has occurred to have an impact on current spendable resources. In other words, revenues must be both measurable and available to pay for the current periods liabilities. Revenues are considered available when collectible either during the current period or after the end of the current period but in time to pay year-end liabilities. Expenditures are recognized when a transaction or event is expected to draw upon current spendable resources rather than future resources.

PUSH-DOWN ACCOUNTING, in acquisitions, is an exception to the general rule that the acquiree's carrying values are unaffected by the purchase may arise when substantially all of the acquiree's shares are purchased by the acquirer. In that case, the acquirer may direct the acquiree to revalue its assets in accordance with the fair values attributed to those assets by the acquirer. This practice is known as push-down accounting, because the fair values are 'pushed down' to the acquiree's books. The net effect is the same as if the acquirer had formed a new subsidiary, which then purchased all of the assets and liabilities of the acquiree. There are two advantages to push-down accounting: a. The first is that the financial position and results of operations of the acquiree will be reported on the same economic basis in both the consolidated statements and its own separate entity statements. Without push-down accounting, for example, it would be possible for the subsidiary to report a profit on its own and yet contribute an operating loss to the parent's consolidated results, if the consolidation adjustments are sufficient to tip the balance between profit and loss; and, b. The second advantage is that the process of consolidation will be greatly simplified for the parent. Since the carrying values will be the same as the acquisition fair values, there will be no need for many of the consolidation adjustments that otherwise will be required every time consolidated statements are prepared.

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