Finance Formulas / July 19, 2018 / Aniyah Booth
Spreading the cost over multiple accounting periods helps provide a clearer picture of how your expenditures compare with your earnings. It also ensures that your accounting complies with federal rules for calculating depreciation.
To force banks to increase capital buffers, and ensure they can withstand financial distress before they become insolvent, Basel III rules would tighten both tier-1 capital and risk-weighted assets (RWAs). The equity component of tier-1 capital has to have at least 4.5% of RWAs. The tier-1 capital ratio has to be at least 6%. Basel III also introduced a minimum leverage ratio, with Tier-1 capital must be at least 3% of total assets, and more for global systemically important banks that are too big to fail. The Basel III rules have yet to be finalized due to an impasse between the U.S. and Europe.
We Also Think You’ll Like