Fars ago, a publishing company reported a quarterly net profit figure that exceeded sales for that quarter. Such a situation suggests there are some difficult accounting issues involved in interim reporting.

Instructions

a) What are the major accounting problems related to interim reports?

b) What problem exists with income taxes in interim reports and how does IFRS recommend that income taxes should be reported?

c) Many academicians have attempted to predict the year's net income after the first quarter's income is reported. These attempts are generally unsuccessful, no matter how sophisticated the prediction model. 

What might be the reason for this inability to predict?

Answer rating: 100% (QA)

a The major accounting issues related to interim reporting are the treatment of 1 extraordinary item... View the full answer