constraints and industry practice‚ GAAP principles are not always applied strictly but are modified as necessary. The following are some commonly observed modifying conventions: Materiality convention - a modifying convention that relaxes certain GAAP requirements if the impact is not large enough to influence decisions. Users of the information should not be overburdened with information overload. Cost-benefit convention - a modifying convention that relaxes GAAP requirements if the expected cost
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I.Issues Why does net income not equal cash flows? Why do we need accrual accounting? (Why do not we fire all accountants and just publish summary bank statements) Why do the differences between owners’‚ players’‚ GAAP and truth number exist?(Can accounting numbers be neutral representations of what happened? What happens if a retired non-roster player (e.g. Joe Portocararo) returns to the active roster while continuing to earn the same money promised him in his guaranteed contract? Of what
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values Influenced by GAAP choices Backward looking Financial Ratios Strengths ◦ Adjusts for size differences (relative measure) ◦ Provides comparative measures of efficiency and growth Weaknesses ◦ Based on book‚ not market values ◦ Influenced by GAAP choices ◦ Iidentification of “norm” is problematic EPS and P/E Ratios Strengths ◦ Widely used and recognized ◦ Linked to market price of stock Weaknesses ◦ ◦ ◦ ◦ EPS influenced by GAAP choices EPS not
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income under Country A GAAP. SKD amortizes goodwill over a longer period (20 years) than is allowed in Country B (5 years)‚ so an additional amount of goodwill amortization expense must be recognized to determine income under Country B GAAP‚ which reduces Country B GAAP income. b. The goodwill adjustment affects the retained earnings in stockholders’ equity. The increase in Country A GAAP income results in an increase in retained earnings and the decrease in Country B GAAP income results in a decrease
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Principles (GAAP). According to GAAP‚ the recording of land value or any asset belonging to a company is to be reported based on the historical cost principle‚ which is the actual cost paid for the land and not fair market value (U. S. GAAP‚ n.d.). Jason P. Browning (2011)‚ an eHow contributor states that an asset can never be restated in a way that reflects appreciation in value (an increase in value due to inflation‚ supply and demand‚ improvements‚ etc.). When it comes to bad debt‚ GAAP has stipulated
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investor and a debt investor and understand the difference * Discuss the role of the Securities and Exchange Commission * Name the Big Four accounting firms and define the term “independent auditor” * Define corporate governance * Discuss GAAP and IFRS and the concept of rules-based versus principles-based * Discuss the roles of the board of directors and the audit committee * Discuss the basics of Sarbanes-Oxley * ------------------------------------------------- Discuss how
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Pfeffer English 015 8 October 2010 Remember the Titans The movie Remember the Titans is based on the true story of the 1971 T.C. Williams high school football team in Alexandria‚ Virginia. The long time head coach of the team‚ played by Will Patton‚ is demoted to assistant coach for the new African American head coach played by Denzel Washington. This startling change in command is due to the desegregation of the schools in Alexandria and causes vast anger throughout the town. Some of the
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LATEST DEVELOPMENTS IN ACCOUNTING Accounting can be trace back some 7000 years to early civilizations of Egypt‚ Babylon‚ Greece and Rome. The first accounting record was found in Babylon‚ 3500 B.C. the records are made from stone‚ mud and leaves and introduction of the Arab-Hindu numerical system in 850 B.C had greatly enhanced accounting development. The pace of accounting development increased during the Industrial Revolution as the economics of developed countries began to mass-produce goods.
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change for companies and accountants but there are a few similarities between the IFRS and US GAAP. When it comes to financial statement presentation‚ they both include a statement of financial position‚ an income statement‚ a statement of comprehensive income‚ and a
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accrual accounting in reflecting timing differences between cash receipts and product/service delivery‚ especially in situations where there are multiple deliverables. The case also enables students to reflect on (a) the use of supplementary non-GAAP disclosures‚ (b) the impact of accounting on firm value and (c) the role of companies in the standard setting process. Reading assignment: Pages 260 – 265 of the text Class notes handout. Assignment questions: 1. Complete the Oracle example
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