Question: LMN Software develops cloud-based applications. Financial transactions for 2023 are as follows: Transactions (in $ millions) Amount Cash Sales 95.0 Credit Sales 45.0 Cash Payments

  1. LMN Software develops cloud-based applications. Financial transactions for 2023 are as follows:

Transactions (in $ millions)

Amount

Cash Sales

95.0

Credit Sales

45.0

Cash Payments

60.0

Accounts Receivable

30.0

R&D Expenses

20.0

Estimated Future Bug Fix Costs

8.0

  1. Requirements:
    • Prepare LMN Software's income statement for 2023 using the modified cash basis.
    • Calculate net income considering the conservatism principle.
    • Discuss the impact of estimated future bug fix costs on financial statements.
    • Analyze the treatment of accounts receivable and R&D expenses under the conservatism principle.

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