Prior material application. You’ll see a problem of this type in every chapter from here through the end of the text; this problem type is brand new to this edition. In these problems, you’ll be considering the relationship between the current chapter’s material (XBRL in this case) and material discussed in earlier chapters (such as transaction process, internal controls, and systems documentation). My goal in including problems like these is to encourage you not to do a “memory dump” as you finish each chapter. These problems should also help you develop your critical thinking skills.
a. Earlier in the text, you learned that most AIS have five generic parts. The chapter talked about internal controls related to XBRL; give an example of each additional part related to XBRL. (For example, a 10-K report to the SEC would be an example of an AIS output.)
b. When an organization incurs a cost, it can be recorded in one of two basic ways in the AIS: it can be debited to an asset (capitalized), as when a company buys a piece of equipment, or it could be debited to an expense (expensed), as with salaries. Suppose a company hired a consultant to help with XBRL implementation. If the company expects to use XBRL for at least five years, should the cost of the consultant be capitalized or expensed? Use the FASB conceptual framework to justify your response.
c. In our discussion of management concepts, you read about Vroom’s expectancy theory, which helps us understand and analyze motivation in organizations. With respect to an XBRL project, someone with low expectancy might say: “Why should I invest the time and energy to learn about XBRL? I’m lousy with computer stuff , and I probably can’t learn it anyway.” Create a similar statement for the other two elements of expectancy theory (instrumentality and valence). Then, explain how you would improve someone’s motivation by addressing each objection.
d. The systems development life cycle comprises seven steps; the development and implementation of XBRL is a systems development project. Work with a group of students to develop a paper/presentation that explains how the SDLC would apply to an XBRL project. For example, the initiation/planning phase might begin when the CFO attends an XBRL workshop/ presentation.
e. Consider the article referenced in Problem 8 (“Six Steps to XBRL”). Create a systems flowchart/Level Zero DFD/REA model documenting the process described in the article. Clearly specify any assumptions you make.
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