mock question 37 phrasing

difference, software, question, reported, totally

#37 'compared to reported EBIT , puglisi's operating income for 2010 would most likely be ...'

the phrasing of this question confused me totally. i thought we were looking for the difference btwn EBIT and operating income as reported on the income statement.
but when you read the answer, you see that we are looking for difference btwn EBIT under capitalized software costs and EBIT under expensed software costs.

was this confusing to other people or was it just me ?

busterbluth

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发表于 2011-7-11 19:45 | 只看该作者

key word: reported. Another key word: "puglisi's operating income"....meaning we want to make the adjustments that she says on the first page. So what adjustments would that be? She wants to expense all software development costs. We get those by doing as they say. Then what else happens if we are expensing what we used to capitalize? Well we don't have any more depreciation/amortization because we are expensing those costs. Because these two amounts are equal, there is no change in operating income. Let me know if that helps.

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mock question 37 phrasing

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