Bank of America Overview/History

Bank of America Overview/History

Bank of America is an American multinational keeping money and monetary administrations partnership headquartered in Charlotte, North Carolina. It is the second biggest bank holding organization in the United States by resources. Starting 2013, Bank of America is the twenty-first biggest organization in the United States by aggregate revenue. In 2010, Forbes recorded Bank of America as the third greatest organization on the planet (Vogel, 2010). The bank’s 2008 obtaining of Merrill Lynch made Bank of America the world’s biggest riches administration partnership and a real player in the speculation keeping money market. As indicated by the Scorpio Partnership Global Private Banking Benchmark 2014 it had resources under administration (Aum) of 1,866.6 (USD Bn) an increment of 12.5% on 2013. The organization held 12.2% of all bank stores in the United States in August 2009, and is one of the Big Four banks in the United States, alongside Citigroup, Jpmorgan Chase and Wells Fargo—its principle rivals. Bank of America works yet doesn’t essentially keep up retail branches in each of the 50 conditions of the U.s., the District of Columbia and more than 40 different nations. It has a retail managing an account foot shaped impression that serves give or take 50 million customer and little business connections at 5,151 saving money focuses and 16,259 robotized teller machines (Atms). Bank of America has been the subject of a few claims and examinations in regards to both home loans and money related revelations going over to the budgetary emergency, including a record settlement of $16.65 billion on August 21, 2012


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Revenue Recognition

Principal transactions revenues incorporate both acknowledged and undiscovered picks up and misfortunes on exchanging resources and exchanging liabilities, speculation securities named exchanging speculations and reasonable quality changes connected with organized obligation. These instruments are recorded at reasonable worth. Reasonable quality is the value that would be gotten to offer a benefit or paid to move a risk in a methodical exchange between commercial center members. Additions and misfortunes are perceived on an exchange date premise.

Commissions revenues incorporate commissions, common trust dissemination expenses and unforeseen conceded deals charge revenue, which are all accumulated as earned. Commissions’ revenues likewise incorporate common store reclamation expenses, which are perceived at the time of recovery. Commissions revenues earned from certain client value exchanges are recorded net of related financier, clearing and trade charges (Kindleberger, 1993).

Overseen records and other charge based revenues essentially comprise of advantage estimated portfolio administration expenses earned from the organization of independently oversaw records and other venture represents retail speculators, yearly record charges, and certain other record related charges. Moreover, until the merger of the Merrill Lynch Investment Management (“MLIM”) business with Blackrock, Inc. (“Blackrock”) toward the end of the second from last quarter of 2006 (the “Blackrock Merger”), oversaw records and other charge based revenues likewise included expenses earned from the administration and organization of retail common trusts and institutional stores, for example, annuity resources, and execution charges earned on certain independently oversaw accounts and institutional cash administration courses of action. Venture keeping money revenues incorporate guaranteeing revenues and charges for merger and securing admonitory administrations, which are gathered when administrations for the exchanges are generously finished. Guaranteeing revenues are exhibited net of exchange related costs. Exchange related costs, basically legitimate, travel and different expenses specifically connected with the exchange, are conceded and perceived in the same period as the related revenue from the speculation keeping money exchange to match revenue recognition.

Cash and receivables (accounts receivable and notes receivable)

Record accounts receivable due when administrations are performed, or supplies or properties are sold. This incorporates things paid and gathered through the Treasury Intra-legislative Payment and Collection (IPAC) framework, or other charging strategy plot in the between organization understanding. Different accumulations are recorded when gotten through mechanized and non-computerized lockboxes or different means. At the point when a client prompts the records receivable office by letter or phone that a remarkable bill is not being paid on the grounds that the client can’t help contradicting the charging sum, the bill ought to be considered in debate. If a piece of the charging is debated, GSA will encourage the client to pay the undisputed sum. Furthermore, customers with questioned bills ought to be alluded to the fitting SSO, particularly when confirming the legitimacy of the bill. Debated Federal bills should be determined as per the Treasury Bulletin No. 2011-04, Intergovernmental Business Rules Section VII of Attachment 1, through the OCFO Council, Intergovernmental Dispute Resolution Committee.

Inventories and cost of goods sold

Inventory is obtained by merchandisers (retailers, wholesalers, merchants) with the end goal of being sold to clients. The expense of the stock obtained however not yet sold is accounted for in the record Inventory or Merchandise Inventory. Stock is accounted for as a current resource on the organization’s accounting report. Stock is a critical resource that needs to be checked nearly. A lot of stock can bring about money stream issues, extra costs (e.g., capacity, protection), and misfortunes if the things get to be outdated. Excessively little stock can bring about lost deals and lost clients. As a result of the expense standard, stock is accounted for on the asset report at the sum paid to get (buy) the stock, not at its offering cost. Stock is additionally a critical resource of producers. In any case, so as to disentangle our clarification, we will concentrate on a retailer. Cost of goods sold is the expense of the stock that was sold to clients. The expense of merchandise sold is accounted for on the wage explanation when the business revenues of the products sold are accounted for.

Operational assets (acquisition valuation, depreciation, and disposal policies)

This policy oversees the Board’s obtaining of supplies, administrations, development, and genuine property. At the point when utilized as a part of conjunction with the Board’s Delegations of Administrative Authority, the Procurement Manual for Technical Personnel, and other relevant strategies, including the Small and Disadvantaged Business Acquisition Policy, this arrangement is proposed to encourage proficiency and adequacy in the procurement process, and help the Board secure the most noteworthy quality supplies, administrations, development, and genuine property inside the time obliged and at the best conceivable worth. These targets are accomplished by: utilizing aggressive securing techniques to the most extreme degree practicable; making recompenses just to capable sellers; considering a mixed bag of elements, for example, item quality, dependability, reliability, and life-cycle cost, in figuring out which offer gives the best esteem to the Board; giving merchants with a reasonable open door under focused obtaining strategies; and cultivating reasonable and impartial connections between the Board and its sellers.

Depletion of natural resources

Depletion is the methodology of designating the depletable expense of characteristic assets to cost as individual units of the asset are separated. Depletable expense parallels the aggregate expense of common assets less any rescue quality staying after the organization gets done with separating them. Exhaustion cost is by and large figured utilizing the units‐of‐activity strategy. Under this system, a per‐unit expense of consumption is found by separating the depletable cost by the evaluated number of units the asset contains. The per‐unit expense times the real number of units extricated and sold in one year measures up to the measure of consumption cost recorded for the advantage (Gertler, & Kiyotaki, 2010)

Amortization of intangibles

Bank of America requires the amortization of positive goodwill and impalpable resources where they have constrained valuable financial lives. They ought to be amortized over these valuable lives on a premise that reflects the normal example of exhaustion, which is thought to be a straight-line premise unless an alternate technique can be showed as more proper. In any occasion, if the utilization of impalpable resources closes when certain lawful rights lapse (regardless of the possibility that there is great prospect of recharging) then the time of the legitimate rights would be the greatest amortization period. All in all it is normal that intangibles will have a helpful life of close to 20 years. A more extended period is allowed just where the strength can be showed, and the goodwill or immaterial resource is fit for proceeded with estimation. Issues happen when goodwill gets to be blended, in light of the fact that frameworks are not set up to distinguish money streams at the applicable resource level, or in light of the fact that the sums being referred to are not sufficiently material to support a yearly disability survey). In these cases a proper time of amortization of short of what 20 years would be satisfactory.

Changes in depreciation methods of Operational Assets

STRAIGHT-LINE METHOD. By a wide margin the most effortlessly comprehended and generally utilized depreciation  strategy is straight line an equivalent measure of depreciable base is allotted to every year of the advantage’s administration life.. By this approach, an equivalent measure of depreciable base is designated to every year of the advantage’s administration life. The depreciable base is basically isolated by the quantity of years in the advantage’s life to focus yearly devaluation.

ACCELERATED METHODS.  Utilizing the straight-line technique verifiably expect that the profits got from the utilization of the advantage are the same every year. In a few circumstances it may be more suitable to accept that the benefit will give more prominent profits in the early years of its life than in the later years. In these cases, a more proper matching of devaluation with revenues is attained to with a declining example of depreciation , with higher devaluation in the early years of the benefit’s life and lower depreciation  in later years. A quickened depreciation  technique additionally would be fitting when profits got from the advantage are roughly equivalent over the benefit’s life, yet repair and upkeep expenses increment altogether in later years. The early years cause higher depreciation and lower repairs and upkeep cost, while the later years have lower devaluation and higher repairs and support. Two ordinarily utilized approaches to accomplish such a declining example are the aggregate of-the-years’-digits system and declining offset routines.

Impairment of Operational Assets

A cost/benefit analysis is regularly embraced to focus fitting resource limit levels. This will guarantee the advantage register can create important, solid and exact data for choice making. Where a low resource limit is situated this will frequently bring about an over-jumbling of the register, prompting inefficiencies and higher organization costs. Alternately a high resource limit may bring about a material modest representation of the truth of advantages in the money related proclamations.

The Banks Materiality makes that data is material in the event that its exclusion, misquote or non-divulgence has the potential, exclusively or altogether, to impact the monetary choices of clients tackled the premise of the money related report or influence the release of responsibility by the administration or overseeing assortment of the element.

Liquidity Analysis

Current ratio when interpreting the current degree of Bank of America, I can see that Bank of America Company had 1.341 USD in present resources for each one USD it owed in present liabilities. The current resources upgraded in 2013 to 1.276 times. Thusly, The Bank of America Company should money related position on 2013 than 2012

Acid test ratio known as snappy degree the capacity for Bank of America to use its brisk assets (money, money equivalents and appealing securities) to pay its available liabilities on 2013 is 1.542 is better than 2012, which are 1.321. Normal accumulation period the ordinary number of days it takes the Bank of America to change over receivables into cash on 2012 was 3.923 is faster and better than 2013 which was 17.214 days.

Cash Flows Analysis (Profitability Ratios Analysis)

As indicated on the ratios figured over the net profit margin demonstrates how quite a bit of every deal USD appears as net salary after all costs are paid. For year 2012 the net revenue is 17 % that implies that the organization created 0.17 fils for each one USD of offers after all costs were represented. For year 2013 the net revenue is 0.34% that implies that 0.34 fils of each USD is benefit so the organization make a decent net overall revenue in 2013 than 2012.



Gertler, M., & Kiyotaki, N. (2010). Financial intermediation and credit policy in business cycle     analysis. Handbook of monetary economics3(11), 547-599.

Kindleberger, C. P. (1993). A financial history of Western Europe. OUP Catalogue.

Revsine, L., Collins, D. W., Johnson, W. B., Collins, D. W., & Johnson, W. B. (2005). Financial         reporting & analysis. New York, NY: Pearson/Prentice Hall.

Vogel, H. L. (2010). Entertainment industry economics: A guide for financial analysis. Cambridge            University Press.

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