4-21-11 Solution

4-21-11 Solution - Q22-23. As indicated in the chapter, the...

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Q22-23. As indicated in the chapter, the FASB has issued guidance on changes in accounting principles, changes in estimates, and corrections of errors, which essentially converges U.S. GAAP to IAS 8. Key remaining differences are as follows. One area in which iGAAP and U.S. GAAP differ is the reporting of error corrections in previously issued financial statements. While both GAAPs require restatement, U.S. GAAP is an absolute standard—that is, there is no exception to this rule. Under U.S. GAAP and iGAAP, if determining the effect of a change in accounting principle is considered impracticable, then a company should report the effect of the change in the period in which it believes it practicable to do so, which may be the current period. Under iGAAP, the impracticality exception applies to both changes in accounting principles and to the correction of errors. Under U.S. GAAP, this exception only applies to changes in accounting principle. IAS 8 does not specifically address the accounting and reporting for indirect effects of changes in accounting principles. As indicated in the chapter, U.S. GAAP has detailed guidance on the accounting and reporting of indirect effects.
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RODRIQUEZ COMPANY Partial Statement of Cash Flows For the Year Ended December 31, 2010 Cash flows from operating activities Net income. ..................................................................................... $1,050,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense. ............................................................. $ 60,000 Decrease in accounts receivable. ............................................. 310,000 Decrease in inventory. ............................................................. 300,000 Increase in prepaid expenses. .................................................. (170,000) Decrease in accounts payable. ................................................. (275,000) Decrease in accrued expenses payable. ................................... (120,000
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4-21-11 Solution - Q22-23. As indicated in the chapter, the...

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