EXTENSION Definition

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EXTENSION is a. In options, the expiration date. Occasionally the parties to an option contract will agree to extend the expiration to a certain date in the future; b. In taxes, the day that one must file one's return if one asked the tax agency for more time to do it. For example, in the United States the deadline to file tax returns is 15 April. If a taxpayer is unable to make this deadline, he/she may ask the IRS for an extension until 15 October. In this case, 15 October is the extension date; or, c. In an offer for bids on a contract, the date to which a deadline is lengthened. If there is either a lack of interest or no good bids on a contract, the company or government offering it may extend the deadline to allow other companies to decide whether to make a bid. This second deadline is the extension date.

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MATERIALITY PRINCIPLE requires accountants to use generally accepted accounting principles except when to do so would be expensive or difficult, and where it makes no real difference if the rules are ignored. If a rule is temporarily ignored, the net income of the company must not be significantly affected, nor should the readers ability to judge the financial statements be impaired.

HIDDEN ASSET is any valued asset that is not included in the book value of a company. Companies have hidden assets such as intellectual property, or customer lists which are of great value, but not reflected in the book value.

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