9. How does the matrix approach proposed by Barker differ from the one proposed by Glover, Ijiri, Levine, and Lian (GILL)? What are the advantages and disadvantages of each?
What will be an ideal response?
ANSWER: The Barker approach is based on the recurring–non-recurring dichotomy whereas the GILL one is based on a fact versus forecast distinction. The income statement using the Barker approach would have three columns: (1) a total column with an arrangement of operating items first and non-operating items below, (2) a “before remeasurement” column with continuing items of both an operating and non-operating nature, and )3) the “remeasurement” column consisting of non-recurring items. Barker’s breakdown would aid in predicting future cash flows from the before remeasurement column. Also, it could aid in assessing some accounting practices of management. Of the two approaches, Barkers seems most promising.
GILL have several approaches to the fact versus forecast distinction, , including (1) cash only, (2) cash plus deferrals, and (3) cash, deferrals and amounts without “amount uncertainty, such as depreciation. There would be difficulties in applying fair value measurements with this approach.
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