FINANCIAL REPORTING FRAMEWORK Definition

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FINANCIAL REPORTING FRAMEWORK is a set of criteria used to determine measurement, recognition, presentation, and disclosure of all material items appearing in the financial statements.

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INCOME CAPITALIZATION: First you must determine the capitalization rate - a rate of return required to take on the risk of operating the business (the riskier the business, the higher the required return). Earnings are then divided by that capitalization rate. The earnings figure to be capitalized should be one that reflects the true nature of the business, such as the last three years average, current year or projected year. When determining a capitalization rate you should compare with rates available to similarly risky investments.

CONGLOMERATE is a group of diverse companies under common ownership and run as a single organization.

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