Problem-Solving Process

Question 1

What are the main steps in the AFM 291 problem-solving process?

Answer 1

Assess the Situation

Identify the Issue(s)

Analyze the Issue(s)

Conclude, Justify, and Recommend

Question 2

What do we do when we assess the situation?

Answer 2

Read the case carefully — start with a quick scan, then do a detailed read.

Identify the users — who needs the info, who requested it, and what they want.

Understand the context — check if the company is public/private, its industry, possible biases, and materiality.

Review transactions — note key past and future events, and build a timeline..

Question 3

What do we do when we identify the issue?

Answer 3

Explain what the financial reporting problem is and why it matters, using facts from the case.

Question 4

What do we do when we analyze the issue?

Answer 4

Check if there’s a specific accounting rule that applies — use it and also see if the Conceptual Framework helps your reasoning.

If no rule exists, use the Conceptual Framework to guide your answer.

Do your analysis — explain why each issue matters using case facts and apply the accounting rules or framework. Show both sides if needed.

Point out areas where estimates or judgment are involved.

Reality check — make sure your answer makes sense in the case and connects to the goals from “Assess the Situation.”

Question 5

What do we do when we conclude, justify and recommend

Answer 5

Pause and think before writing your answer.

State your choice for each issue and explain why you chose it.

Explain the impact on the balance sheet and income statement.

Suggest the correct journal entry or adjustment needed.

🔹 Conclusion = your comment or opinion
🔹 Recommendation = what action should be taken