INTERMEDIATE ACCOUNTING

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1 INTERMEDIATE ACCOUNTING Earl K. Sfice, PhD Brigham Young University James D. Slice, PhD Brigham Young University K. Fred Skousen, PhD, CPA Brigham Young University / -<> SOUTH-WESTERN fie? CENGAGE Learning- Australia Brazil Japan Korea Mexico Singapore Spain United Kingdom United States

2 (p PART ONE FOUNDATIONS OF FINANCIAL ACCOUNTING 1 FINANCIAL REPORTING 2 Accounting and Financial Reporting 8 Users of Accounting Information 8 Incentives 10 Financial Reporting 10 Development of Accounting Standards Financial Accounting Standards Board 12 The Standard-Setting Process 13 Other Organizations Important to Financial Reporting 15 Securities and Exchange Commission American Institute of Certified Public Accountants 17 American Accounting Association 17 Internal Revenue Service 18 What Is GAAP? 18 International Accounting Issues 19 International Differences in GAAP 20 International Accounting Standards Board 20 A Conceptual Framework of Accounting Nature and Components of the FASB's Conceptual Framework 22 Objectives of Financial Reporting 23 Qualitative Characteristics of Accounting Information 24 Elements of Financial Statements 27 Recognition, Measurement, and Reporting 28 Traditional Assumptions of the Accounting Model 31 Impact of the Conceptual Framework Careers in Financial Accounting and the Importance of Personal Ethics 32 Public Accounting 33 Corporate Accounting 33 User (Analyst, Banker, Consultant) 34 The Importance of Personal Ethics 34 Overview of Intermediate Accounting A REVIEW OF THE ACCOUNTING CYCLE 48 Overview of the Accounting Process 51 Recording Phase 51 Reporting Phase 51 Recording Phase 53 Double-Entry Accounting 53 Analyzing Business Documents 55 Journalizing Transactions 55 Posting to the Ledger Accounts 56 Reporting Phase 57 Preparing a Trial Balance 57 Preparing Adjusting Entries Transactions Where Cash Will Be 59 Exchanged in a Future Period 60 Transactions Where Cash Has Been Exchanged in a Prior Period Transactions Involving Estimates Preparing Financial Statements 64 Using a Spreadsheet 65 Closing the Nominal Accounts.65 Preparing a Post-Closing Trial Balance Accrual Versus Cash-Basis Accounting Computers and the Accounting Process THE BALANCE SHEET AND NOTES TO THE FINANCIAL STATEMENTS 92 Elements of the Balance Sheet 95 Classified Balance Sheets 97 Current Assets 98 Noncurrent Assets Current Liabilities Noncurrent Liabilities 102 Owners' Equity 104 i Offsets on the Balance Sheet 107 Format of the Balance Sheet 108 Format of Foreign Balance Sheets 110 Balance Sheet Analysis 112 Relationships Between Balance Sheet Amounts 112 Relationships Between Balance Sheet and Income Statement Amounts 116 Notes to the Financial Statements 117 Summary of Significant Accounting Policies 118 Additional Information to Support Summary Totals 118 Information About Items Not Included in Financial Statements 118 Supplementary Information 119 Subsequent Events 120 Limitations of the Balance Sheet 122 XIX

3 XX Contents 4 THE INCOME STATEMENT 154 Income: What It Is and What It Isn't Financial Capital Maintenance Concept of Income Determination 157 Physical Capital Maintenance Concept of Income Determination 158 Why Is a Measure of Income Important? How Is Income Measured? 160 Revenue and Gain Recognition 161 Earlier Recognition 163 Later Recognition 164 Expense and Loss Recognition 165 Gains and Losses from Changes in Market Values 166 Form of the Income Statement 166 Components of the Income Statement Income from Continuing Operations Transitory, Irregular, and Extraordinary Items 173 Net Income or Loss 180 Comprehensive Income and the Statement of Stockholders' Equity 183 Comprehensive Income 183 The Statement of Stockholders' Equity Forecasting Future Performance 185 Forecast of Balance Sheet Accounts Forecast of Income Statement Accounts 188 Concluding Comments STATEMENT OF CASH FLOWS AND ARTICULATION 218 What Good Is a Cash Flow Statement? Sometimes Earnings Fail 222 Everything Is on One Page 222 It Is Used as a Forecasting Tool 223 Structure of the Cash Flow Statement Three Categories of Cash Flows 224 Noncash Investing and Financing Activities 226 Cash Flow Categories Under IAS Reporting Cash Flow from Operations Operating Activities: Simple Illustration 229 Preparing a Complete Statement of Cash Flows 233 Using Cash Flow Data to Assess Financial Strength 240 Cash Flow Patterns 240 Cash Flow Ratios 241 Articulation: How the Financial Statements Tie Together 243 Forecasted Statement of Cash Flows Conclusion EARNINGS MANAGEMENT 280 Motivation for Earnings Management Meet Internal Targets 285 Meet External Expectations 286 Provide Income Smoothing 288 Provide Window Dressing for an IPO or a Loan 289 Earnings Management Techniques 290 Earnings Management Continuum Chairman Levitt's Top Five Accounting Hocus-Pocus Items 292 Pro Forma Earnings 295 Pros and Cons of Managing Earnings Financial Reporting as a Part of Public Relations 297 Is Earnings Management Ethical? 298 Personal Ethics 299 Elements of Earnings Management Meltdowns 300 Downturn in Business Pressure to Meet Expectations Attempted Accounting Solution 302 Auditor's Calculated Risk 302 Insufficient User Skepticism 303 Regulatory Investigation Massive Loss of Reputation Transparent Financial Reporting: The Best Practice 305 What Is the Cost of Capital? 306 The Role of Accounting Standards 306 The Necessity of Ethical Behavior 307 MODULE:TIME VALUE OF MONEY REVIEW ' TVM-1 The Time-Value-of-Money Concept... TVM-1 Computing the Amount of Interest... TVM-2 Simple Interest TVM-3 The Difference Between Simple and Compound Interest TVM-3 Future and Present Value Techniques... TVM-4 Use of Formulas TVM-5 Use of Tables TVM-6 Business Calculator Keystrokes TVM- 7 Excel Spreadsheet Functions TVM-8 Business Applications TVM-9 Determining the Number of Periods, the Interest Rate, or the Amount of Payment TVM-13 Ordinary Annuity vs. Annuity Due TVM-16 Concluding Comment TVM-20

4 Contents XXI MODULE: FAIR VALUE The Need for Fair Values Where Are Fair Values Used in Financial Statements? What Is "Fair Value"? FV-1 FV-1 FV-3 FV-5 The Hypothetical Transaction FV-7 The Principal (or Most Advantageous) Market Market Participants FV-7 FV-7 Highest and Best Use FV-7 Valuation Techniques Inputs to Valuation Techniques FV-8 FV-8 Examples of Valuation Models Market Multiples Matrix Pricing Discounted Cash Flows, Finite Period Discounted Cash Flows, Infinite Period Adjusted Replacement Cost Fair Value Disclosures PART TWO ROUTINE ACTIVITIES OF A BUSINESS 7 THE REVENUE/RECEIVABLES/CASH FV-9 FV-9 FV-10 FV-11 FV-12 FV-13 FV-14 CYCLE 320 The Operating Cycle of a Business 323 Accounting for Sales Revenue 325 Discounts 326 Sales Returns and Allowances 32 7 The Valuation of Accounts Receivable Accounting for Bad Debts 327 Warranties for Service or Replacement Monitoring Accounts Receivable 333 Average Collection Period 333 Cash Management and Control 335 Composition of Cash 335 Compensating Balances 337 Management and Control of Cash 338 Bank Reconciliations 338 Presentation of Sales and Receivables in the Financial Statements 341 Receivables as a Source of Cash 343 Sale of Receivables without Recourse Sale of Receivables with Recourse 345 Secured Borrowing 346 Derecognition of Receivables: IAS Notes Receivable 348 Valuation of Notes Receivable 349 Special Valuation Problems 350 Impact of Uncollectible Accounts on the Statement of Cash Flows REVENUE RECOGNITION 382 Revenue Recognition 386 SAB 101/ Persuasive Evidence of an Arrangement 389 Delivery Has Occurred or Service Has Been Rendered 391 Price Is Fixed or Determinable 395 / Collectibility Is Reasonably Assured Income Statement Presentation of Revenue: Gross or Net 398 An Asset-and-Liability Approach to Revenue Recognition 400 Customer Consideration Model 401 Measurement Model 402 Revenue Recognition Prior to Delivery of Goods or Performance of Services General Concepts of Percentage-of- Completion Accounting 404 Necessary Conditions to Use Percentageof-Completion Accounting 404 Measuring the Percentage of Completion 405 Accounting for Long-Term Construction-, Type Contracts 406 Using Percentage-of-Completion Accounting: Cost-to-Cost Method 408 Using Percentage-of-Completion Accounting: Other Methods 410 Revision of Estimates 410 / Reporting Anticipated Contract Losses Accounting for Long-Term Service Contracts: The Proportional Performance Method 414 Revenue Recognition After Delivery of Goods or Performance of Services 416 Installment Sales Method 417 Cost Recovery Method Cash Method INVENTORY AND COST OF GOODS SOLD 448 What Is Inventory? 451 Raw Materials 452 Work in Process 453 Finished Goods 453 Inventory Systems 454

5 XXII Contents Whose Inventory Is It? 456 Goods in Transit 456 Goods on Consignment 457 Conditional Sales, Installment Sales, and Repurchase Agreements 458 What Is Inventory Cost? 458 Items Included in Inventory Cost 459 Discounts as Reductions in Cost 460 Purchase Returns and Allowances 461 Inventory Valuation Methods 462 Specific Identification 463 Average Cost Method 464 First-In, First-Out Method 465 Last-In, First-Out Method 465 Comparison of Methods: Cost of Goods Sold and Ending Inventory 466 Complications with a Perpetual Inventory System 467 More About LIFO 469 LIFO Layers 469 LIFO Liquidation 471 LIFO and Income Taxes 472 LIFO Pools and Dollar-Value LIFO 474 Overall Comparison of FIFO, LIFO, and Average Cost 474 Income Tax Effects 474 Bookkeeping Costs 475 Impact on Financial Statements 475 Industry Comparison 475 International Accounting and Inventory Valuation 476" Inventory Accounting Changes 476 Inventory Valuation at Other than Cost Lower of Cost or Market 477 Assigned Inventory Value: The Case of Returned Inventory 481 Accounting for Declines in Inventory Value: IAS Gross Profit Method 482 Effects of Errors in Recording Inventory Using Inventory Information for Financial Analysis 487 Required Disclosures Related to Inventories 489 Retail Inventory Method 489 Retail Inventory Method: Lower of Cost or Market 491 LIFO Pools, Dollar-Value LIFO, and Dollar-Value LIFO Retail 492 LIFO Pools 493 Dollar-Value UFO 495 Use of an Index 496 Dollar-Value LIFO: Multiyear Example 497 Dollar-Value LIFO Retail Method 499 Purchase Commitments 500 Foreign Currency Inventory Transactions INVESTMENTS IN NONCURRENT OPERATING ASSETS ACQUISITION 544 What Costs Are Included in Acquisition Cost? 548 Tangible Assets 549 Intangible Assets 550 Acquisitions Other Than Simple Cash Transactions 552 Basket Purchase 552 Deferred Payment 553 Leasing 555 Exchange of Nonmonetary Assets 555 Acquisition by Issuing Securities 556" Self-Construction 556" Acquisition by Donation or Discovery Acquisition of an Asset with Significant Restoration Costs at Retirement 563 Acquisition of an Entire Company 564 Capitalize or Expense? 565 Postacquisition Expenditures 566" Research and Development Expenditures 567 Computer Software Development Expenditures 56"S Oil and Gas Exploration Costs 569 Accounting for the Acquisition of Intangible Assets 571 Internally Generated Intangibles 572 Intangibles Acquired in a Basket Purchase 573 Intangibles Acquired in the Acquisition of a Business 576 Valuation of Assets at Fair Values 580 Measuring Property, Plant, and Equipment Efficiency 581 Evaluating the Level of Property, Plant, and Equipment 582 Dangers in Using the Fixed Asset Turnover Ratio INVESTMENTS IN NONCURRENT OPERATING ASSETS UTILIZATION AND RETIREMENT 6l4 Depreciation 617

6 Contents XXIII Factors Affecting the Periodic Depreciation Charge 618 Recording Periodic Depreciation 619 Methods of Depreciation 620 Depreciation and IAS Depreciation and Accretion of an Asset Retirement Obligation 627 Depletion of Natural Resources 628 Changes in Estimates of Cost Allocation Variables 629 Change in Estimated Life 630 Change in Estimated Units of Production 630 Change in Depreciation Method 631 Impairment of Tangible Assets 632 Accounting for Asset Impairment 632 International Accounting for Asset Impairment: IAS Accounting for Upward Asset Revaluations: LAS Amortization and Impairment of Intangibles 636 ipart Amortization and Impairment of Intangible Assets Subject to Amortization 637 Impairment of Intangible Assets Not Subject to Amortization 638 Impairment of Goodwill/. 639 Procedures in Testing Goodwill for Impairment 639 International Accounting for Intangible Impairment: IAS Asset Retirements 641 Asset Retirement by Sale 642 Asset Classification as Held for Sale Asset Retirement by Exchange for Other Nonmonetary Assets 643 Nonmonetary Exchange without Commercial Substance 644 Depreciation for Partial Periods 647 Income Tax Depreciation 649 THREE ADDITIONAL ACTIVITIES OF A BUSINESS 12 DEBT FINANCING 680 Classification and Measurement Issues Associated with Debt 684 Definition of Liabilities 684 Classification of Liabilities 685 Measurement of Liabilities 686 Accounting for Short-Term Debt Obligations 688 Short-Term Operating Liabilities 688 Short-Term Debt 688 Short-Term Obligations Expected to Be Refinanced 689 Lines of Credit 690 Present Value of Long-Term Debt 692 Financing with Bonds 694 Accounting for Bonds 694 Nature of Bonds 695 Market Price of Bonds 697 Issuance of Bonds 699 Accounting for Bond Interest 701,- Cash Flow Effects of Amortizing Bond '' Premiums and Discounts 705 Retirement of Bonds at Maturity 706 Extinguishment of Debt Prior to Maturity 706 Reporting Some Equity-Related Items as Liabilities 712 Fair Value Option 712 Off-Balance-Sheet Financing 715 Leases 715 Unconsolidated Subsidiaries 716 Variable Interest Entities (VIEs) 717 Joint Ventures 718 Research and Development Arrangements 719 Project Financing Arrangements 719 Reasons for Off-Balance-Sheet, Financing 719 Analyzing a Firm's Debt Position 720 Disclosing Debt in the Financial Statements 721 Accounting for Troubled Debt Restructuring 723 Transfer of Assets in Full Settlement (Asset Swap) 724 Grant of Equity Interest (Equity Swap) Modification of Debt Terms 726" 13 EQUITY FINANCING 754 Nature and Classifications of Paid-in Capital 758 Common Stock 759 Par or Stated Value of Stock 760 Preferred Stock 76"0 Issuance of Capital Stock 763 Capital Stock Issued for Cash 76"3 Capital Stock Sold on Subscription 764

7 Contents Capital Stock Issued for Consideration Other Than Cash 765 Issuance of Capital Stock in a Business Combination 766 Stock Repurchases 766 Treasury Stock 767 Stock Rights, Warrants, and Options Stock Rights 771 Stock Warrants 771 Accounting for Share-Based Compensation 773 Basic Stock Option Compensation Plan Accounting for Performance-Based 774 Plans 776 Accounting for Awards that Call for Cash Settlement. 778 Current Development in the Accounting for Stock Options 779 Broad-Based Plans 780 Reporting Some Equity-Related Items as Liabilities 780 Mandatorily Redeemable Preferred Shares 781 Written Put Options 782 Obligation to Issue Shares of a Certain Dollar Value 783 Noncontrolling Interest 785 Stock Conversions 785 Case 1: One Preferred Share for Four Common Shares ($1 par) 786 Case 2: One Preferred Share for Four Common Shares ($20 par) 786 Factors Affecting Retained Earnings 787 Net Income and Dividends 787 Prior-Period Adjustments 788 Other Changes in Retained Earnings Retained Earnings Restrictions 789 Accounting for Dividends 790 Recognition and Payment of Dividends Cash Dividends Property Dividends 792 Stock Dividends 792 Liquidating Dividends 796 Other Equity Items 797 Equity Items That Bypass the Income Statement and Are Reported as Part of Accumulated Other Comprehensive Income 798 International Accounting: Equity Reserves 800 Disclosures Related to the Equity Section INVESTMENTS IN DEBT AND EQUITY SECURITIES 832 Why Companies Invest in Other Companies 835 Safety Cushion 835 Cyclical Cash Needs 835 Investment for a Return 836 Investment for Influence 837 Purchase for Control 838 Classification of Investment Securities Debt Securities 839 Equity Securities 839 Held-to-Maturity Securities Available-for-Sale Securities Trading Securities 840 Equity Method Securities Why the Different Categories? The Fair Value Option 841 Classification of Investment Securities According to IFRS Purchase of Securities 842 Purchase of Debt Securities 843 Purchase of Equity Securities 843 Recognition of Revenue from Investment Securities 844 Recognition of Revenue from Debt Securities 844 Recognition of Revenue from Equity Securities 846 Equity Method Accounting According to IRFS 853 Accounting for the Change in Value of Securities 853 Accounting for Temporary Changes in the Value of Securities 854 Accounting for "Other-Than-Temporary" Declines in the Value of Securities 856 Sale of Securities 858 Impact of Sale of Securities on Unrealized Gains and Losses 859 Derecognition 860 Transferring Securities between Categories 862 Transferring Debt and Equity Securities between Categories 863 Investment Securities and the Statement of Cash Flows 866 Cash Flows from Gains and Losses on Available-for-Sale Securities 866 Cash Flows from Gains and Losses on Trading Securities 867 Equity Method Securities and Operating Cash Flow 868 Classification and Disclosure 868

8 Contents XXV m x m N D E D ;M w E mm is Accounting for the Impairment of a Loan 872 Measurement of Impairment 873 Example of Accounting for Loan Impairment LEASES 902 Economic Advantages of Leasing 904 Simple Example 906 Nature of Leases 908 Cancellation Provisions 908 Bargain Purchase Option 908 Lease Term 908 Residual Value 909 Minimum Lease Payments 909 Lease Classification Criteria 910 General Classification Criteria Lessee and Lessor 911 Revenue Recognition Criteria Lessor Application of General Lease Classification Criteria 913 Accounting for Leases Lessee 914 Accounting for Operating Leases Lessee 915 Accounting for Capital Leases Lessee Treatment of Leases on Lessee's Statement of Cash Flows. /. 921 Accounting for Leases Lessor 922 Accounting for Operating Leases Lessor 923 Accounting for Direct Financing Leases 924 Accounting for Sales-Type Leases Lessor 927 Sale of Asset During Lease Term 930 Treatment of Leases on Lessor's Statement of Cash Flows 930 Disclosure Requirements for Leases 932 International Accounting of Leases 935 Sale-Leaseback Transactions INCOME TAXES 966 Deferred Income Taxes: An Overview Example 1. Simple Deferred Income Tax Liability 970 Example 2. Simple Deferred Tax Asset Permanent and Temporary Differences 972 Illustration of Permanent and Temporary Differences 974 Annual Computation of Deferred Tax Liabilities and Assets 975 Example 3- Deferred Tax Liability 976 Example 4. Deferred Tax Asset 979 Example 5. Deferred Tax Liabilities and Assets 980 Valuation Allowance for Deferred Tax Assets 981 Carryback and Carryforward of Operating Losses 985 Net Operating Loss (NOL) Carryback Net Operating Loss (NOL) Carryforward 986 Scheduling for Enacted Future Tax Rates 989 Financial Statement Presentation and Disclosure 990 Deferred Taxes and the Statement of Cash Flows 994 International Accounting for Deferred Taxes 995 No-Deferral Approach 995 Comprehensive Recognition Approach Partial Recognition Approach EMPLOYEE COMPENSATION PAYROLL, PENSIONS, AND OTHER COMPENSATION ISSUES 1020 Routine Employee Compensation Issues 1022 Payroll and Payroll Taxes 1023 Compensated Absences 1026 Nonroutine Employee Compensation Issues 1027 Stock-Based Compensation and Bonuses Postemployment Benefits Accounting for Pensions 1029 Nature and Characteristics of Employer Pension Plans 1030 Issues in Accounting for Defined Benefit Plans 1034 Simple Illustration of Pension Accounting 1034 Comprehensive Pension Illustration Thornton Electronics Thornton Electronics Thornton Electronics Disclosure of Pension Plans 1054 Pension Settlements and Curtailments 1055 Postretirement Benefits Other than Pensions 1058 Nature of Postretirement Health Care Plans 1059 Overview offasb Statement No

9 XXVI Contents PART FOUR OTHER DIMENSIONS OF FINANCIAL REPORTING 18 EARNINGS PER SHARE 1082 Simple and Complex Capital Structures Basic Earnings per Share 1086 Issuance or Reacquisition of Common Stock 1087 Stock Dividends and Stock Splits 1087 Preferred Stock Included in Capital Structure 1088 Participating Securities and Two-Class Method 1090 Diluted Earnings per Share Options, Warrants, and Rights 1092 Stock Options, Warrants, and Rights 1093 Illustration of Diluted Earnings per Share with Stock Options 1094 Diluted Earnings per Share Convertible Securities 1095 Illustration of Diluted Earnings per Share with Convertible Securities 1096 Computation of Diluted Earnings per Share for Securities Issued during the Year 1096 Shortcut Test for Antidilution 1O5>7 Effect of Actual Exercise or Conversion 1097 Effect of a Loss from Continuing Operations on Earnings per Share Multiple Potentially Dilutive Securities 1099 Financial Statement Presentation 1102 Comprehensive Illustration Using Multiple Potentially Dilutive Securities DERIVATIVES, CONTINGENCIES, BUSINESS SEGMENTS, AND INTERIM REPORTS 1126 Derivatives 1128 Simple Example of a Derivative 1128 Types of Risk 1131 Price Risk 1131 Credit Risk 1131 Interest Rate Risk 1131 Exchange Rate Risk 1131 Types of Derivatives 1132 Swap 1133 Forwards 1133 Futures 1134 Option 1135 Types of Hedging Activities 1137 Accounting for Derivatives and for Hedging Activities 1138 Overview of Accounting for Derivatives and Hedging Activities 1139 Illustrations of Accounting for Derivatives and Hedging Activities Summary 1145 Contingencies 1146 Accounting for Contingencies: Probable, Possible, and Remote 1146 Accounting for Lawsuits 1149 Accounting for Environmental Liabilities 1151 Segment Reporting 1152 Business Segments 1153 Interim Reporting 1156 Interim Reports ACCOUNTING CHANGES AND ERROR CORRECTIONS 1182 Accounting Changes 1185 Change in Accounting Estimate 1187 Change in Accounting Principle 1190 Pro Forma Disclosures after a Business Combination 1194 Error Corrections 1196 Types of Errors 1196 Illustrative Example of Error Correction 1197 Required Disclosure for Error Restatements 1203 Summary of Accounting Changes and Error Corrections STATEMENT OF CASH FLOWS REVISITED 1228 Preparing a Complete Statement of Cash Flows 1232 Preparing a Statement of Cash Flows in the Absence of Detailed Transaction Data 1234 A 6-Step Process for Preparing a Statement of Cash Flows 1236

10 Contents XXVII An Illustration of the 6-Step Process International Cash Flow Statements International Accounting Standard United Kingdom Cash Flow Standard, FRS Expanded Illustration of Statement of Cash Flows 1251 Cash Flow Analysis 1256 Kamila Software: Background, Financial Statements, and Extra Details 1256 The Decision Context: Is Kamila a Financially Viable Software Partner? Kamila Software: Solution ACCOUNTING IN A GLOBAL MARKET 1280 The Need for One Worldwide Financial Accounting Standards 1283 Dangers of Differing National Accounting Standards 1284 Brief History of the ISAB and Its Standards (IFRS) 1285 Summary of U.S. GAAP/IFRS Differences 1288 Foreign Currency Financial Statements , Translation ANALYSIS OF FINANCIAL STATEMENTS 1306 Framework for Financial Statement Analysis 1308 Common-Size Financial Statements DuPont Framework 1312 Other Common Ratios 1319 Impact of Alternative Accounting Methods 1322 ' Introduction to Equity Valuation 1325 APPENDIX: INDEX OF REFERENCES TO APB AND FASB PRONOUNCEMENTS CHECK FIGURES GLOSSARY A-l CF-1 G-l SUBJECT INDEX 1-1 COMPANY INDEX 1-19

COPYRIGHTED MATERIAL INDEX 1087

COPYRIGHTED MATERIAL INDEX 1087 INDEX 1087 A Accelerated depreciation, 233 Accounting basis of, 49, 140 Cash to accrual conversion, 51 Accounting changes, 106 Interim reporting, 789 Accounting information Qualitative characteristics