Question: GHI Software Solutions develops custom software. Financial transactions for 2023 are as follows: Transactions (in $ millions) Amount Cash Receipts 60.0 Credit Sales 30.0 Cash

GHI Software Solutions develops custom software. Financial transactions for 2023 are as follows:

Transactions (in $ millions)

Amount

Cash Receipts

60.0

Credit Sales

30.0

Cash Payments

35.0

Accounts Receivable

20.0

R&D Expenses

25.0

Estimated Software Bugs Fix Costs

8.0

Requirements:

  • Prepare GHI Software Solutions' income statement for 2023 using the modified cash basis.
  • Calculate net income considering the conservatism principle.
  • Discuss the impact of estimated software bugs fix costs on financial statements.
  • Analyze the treatment of R&D expenses under the conservatism principle.

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