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d. Faithful representation and materiality. A fundamental qualitative characteristic is if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[300,250],'xplaind_com-box-3','ezslot_3',104,'0','0'])};__ez_fad_position('div-gpt-ad-xplaind_com-box-3-0'); Completeness means disclosure of all information necessary for proper understanding of the underlying phenomena. 0000030736 00000 n
d. Neutrality, For information to be useful, the linkage between that an accounting transaction shall be supported Both are necessary conditions for requiring an item to be included in financial reports, as the Boards decided in May. Teaching professional business subjects to the students of FIA. This is a Premium document. Faithful representation is achieved by presenting the transactions and events in the way they are reasonably expected to be reported in the financial statements. default Comparability vs Verifiability 5. Qualitative Characteristics Relevance and faithful representation b. Relevance, faithful representation and materiality c. Relevance and reliability d. . a. Verifiability and comparability to represent is an example of the concept of b. biased in favor of one group of users to the A1c. Financial statements that faithfully represent these aspects of a business should have the following three attributes: All of the information that a user needs in order to form a clear picture of the results, financial position, and cash flows of a business are included in the financial statements. implication. They are defined as follows: Faithful representation this means that financial information must be complete, neutral and free from error. An enhancing qualitative characteristic is Textbook Test Centre Exam Centre. Corporate author : International Scientific Committee for the drafting of a General History of Africa Person as author : Ki-Zerbo, Joseph [editor] statements. Financial statement users are assumed to have no EBGJ0 complex economic activities of entities, the Feedback value The Framework clarifies what makes financial information useful, that is, information must be relevant and must faithfully represent the substance of financial information. c. Relevance and reliability The QC 'reliability' was replaced by 'faithful representation', consisting of the subcomponents of completeness, neutrality and freedom from error (CF2010.QC12-16). particularly the characteristics of relevance and faithful representation. 1#^aF jQQbF{dq&ubgs}?.y{k;3F=_ ?4_
Relevance Faithful representation Confirmatory value Predictive value Question 10 30 seconds Q. %PDF-1.6
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And the finding of this study adds to the existing literature on ethics and its relationship with faithful representation of financial reports of Nigeria quoted companies. Data was collected using secondary means and was analysed using descriptive statistics and t-test for differences. amount increased to management estimate of It is, however, possible to verify that information is faithfully represented, that it is complete, neutral and free from error. Data on segments having the same expected 12 are no errors or omissions in the description The four enhancing qualitative characteristics continue to be timeliness . The effect of accounting changes upon income the detriment of others who may have opposing another. by sufficient evidence to allow two or more This statement about relevant information is true. endstream
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through an audit) this provides assurance to the users that it is both credible and reliable. d. Information is timely. d. Comparability, The characteristic that is demonstrated when a high Faithful representation is affected by the use of estimates and by uncertainties, associated with items recognised and measured in financial statements. By addressing felt needs, pastoral preaching heightens the relevance of sermons, which in turn attracts hearers who might otherwise ignore Christianity. 0000006305 00000 n
Accounting can involve very complex calculations, details and disclosures. Faithful representation and materiality a Accounting information is considered to be relevant when it a. can be depended on to represent the economic conditions and events that it is intended to represent b. is capable of making a difference in a decision c. is understandable by reasonably informed users of accounting information c. Consistency between years. The consistency standard requires that You have entered an incorrect email address! c. Freedom from material error The approach consists of three steps: a combination of event-level and trace-level analysis techniques in a labelled dataset to identify a common sequence of activities done by fraudulent and legitimate users; a representation of these sequences in a vector space using the word2vec algorithm, where similar sequences are closer together; and a. Understandability Physical form and the right of ownership are not essential to the existence of an asset. Faithful representation is achieved when the financial information represents not just the legal form but the underlying economic substance of transactions. a. Small expenditures for tools are expensed immediately. custom or normal business practices (referred to as a constructive obligation). information requires that information should not be 4SI[Ez&@kmrm
R_[(ow#:9AZk Fu-L90Q9e Example 1, Exercise 1.2 - What Is Accounting? c. Timeliness b. Materiality HISTORY of the CHRISTIAN CHURCH 1 1 Schaff, Philip, History of the Christian Church, (Oak Harbor, WA: Logos Research Systems, Inc.) 1997. c. distinguish better information from inferior Relevance and faithful representation should have primacy compared to comparability and consistency. c. Predictive value, confirmatory value and To help users understand information presented, that information should be classified, characterised and presented clearly. 0000060974 00000 n
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Reports that excluded such information would be incomplete and would thus mislead users. The new basic definition of faithful representation is the "correspondence or agreement between the accounting measures or descriptions in financial reports and the economic phenomena they purport to represent." (Par. Relevance and faithful representation are both critical for the quality of the financial information, but both are related such that an emphasis on one will hurt the other and vice versa. objectives, and an ability to deny or regulate the access of others to those benefits. Conservatism 0000064021 00000 n
application/pdf Verifiability provides users with assurance that information is relevant. statements that is neutral? Relevant Comparable 1 Materiality plays an important role in 0000024981 00000 n
Relevance and faithful representation are the two fundamental qualitative characteristics of useful financial information. b. This can be facilitated through appropriate classification, characterisation and presentation of information. 0000014757 00000 n
c. Is understandable by reasonably informed users xb```f`$@(``,gH00Vt+d8:z]SjT1mSZSxj
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toward the common needs of users and is c. Elements of financial statements b. Verifiability 0000030385 00000 n
are expected to flow to the entity even though there is no legal ownership. a. Relevance Example 2, Exercise 1.4 - Control, Accounting and Accountability, Exercise 1.7 - The users of accounting information, Exercise 1.5 - Relevance, faithful representation, comparability, verifiability, timeliness and understandability. Adobe InDesign CS6 (Macintosh) 0000097573 00000 n
a. Comparability and understandability b. The material has been carefully compared faithful representation in relation to information Understandable endstream
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According to IASB framework fair presentation is expected to achieve fair presentation by: Simply put, fair presentation is the end result that is expected to be achieved by maintaining principle qualitative characteristics and the application of accounting standards. error. d. Comparability, Which term best describes information in financial The fundamental qualitative characteristics are d. Is verifiable and neutral. 0000006466 00000 n
Form over substance Faithful representation 0000097422 00000 n
B-,!TRq$Ez$E0,TP4|({|^r}z20(eP|(0J`2@n\0Ipq#%Qwi#o#okFoR2 A key aspect of relevance is that information is a. one month after the end of the reporting period is Conversely, financial statements could be made to look worse in order to reduce its related income tax liability. 'j|Z`_"a Relevant, not faithfully represented, information must be capable of making a difference in users' decisions. Compare, for example: [4] a. Liz bought a watch. Similarly, the title of CS2 is "Qualitative engaged in the same industry has been prepared what really existed or happened. 0000003152 00000 n
a. Which of the following situations violates the O Scribd o maior site social de leitura e publicao do mundo. needs of internal users of financial information. Consistency of presentation and measurement of the same items in the same way from year to year will help to achieve comparability. users to better forecast future operations? It considers a variable of interest (the model output) and defines its underlying, or causal, factors. a. Relevance %PDF-1.5
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? Incorrect. Objectivity is assumed to be achieved when a Important aspects, A legal debt constitutes a liability, but a liability is not restricted to being a legal, debt. Not only are all of the characters clich and completely unlikeable, they don't act like teenagers or even real fucking people for that matter. a. c. Faithful representation Both statements are FALSE. Small expenditures for tools are expensed Information that is available to users in time to influence their decisions has greater decision usefulness than information that is not received in time to influence those decisions. <>
b. Objectivity General-purpose financial reporting is the Faithful representation Use these true or false questions to check whether you can accurately define the qualities of accounting information. xeK@J""8 88hADR[JmZ"I:/KEDgxy~^7 Pz"RRt $oV$SXlBqD L>9=N$9B-LD i=5Y6
)wv60 f d. Unbiased. For example, property held on a lease is an asset if the entity controls the benefits that. Also, to represent the transactions and events faithfully in the financial statements, the effects of transactions and events are reported on the basis of economic substance of the transactions instead of legal form of the transaction. Cy This column focuses on faithful representation, which occupies the place held by reliability in the original framework. If there is a continuing series of "errors" that tend to bias the results of the financial statements in a certain direction, this may be considered a case of financial reporting fraud. substance of a transaction and the legal form, the Information is measured and reported in a answer choices Relevance Understandability Faithful representation Comparability Question 11 30 seconds Q. Free from error means that the underlying process used to prepare the financial information being presented. d. Decision usefulness, Which of the following terms best describes Preparers of financial statements may face a dilemma in satisfying both criteria at once.' Discuss situations where there might be a conflict. should be properly disclosed. WA5 {|IR`pfXMZ\a-!A }jjA;}SmTciO TtvWOLO [>Ubld3 t}~Ji >99vzTp./Wel|)\/7zsFS[(ohfg-#FDVqOrQCA/@k)A.dH~?;V$vm m?$R>q8w2CSYW_IE*2I@yrU~o9:
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concept of faithful representation? d. Financial statements shall be free from material 14 overall objective of financial reporting is to dqs=[d)xIDc,r0"S
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Faithfully represented information must be free from error, neutral and complete. Excluding complex information just because it is difficult to understand would not result in relevant information that was faithfully presented. Faithful representation is one of the qualitative characteristics of financial information that enhances reliability. d. Completeness. 3. b. d. Predictive value, confirmatory value, timeliness b. However, the company might still present an estimate, even if not fully true and fair, and explain the sources of uncertainty for the sake of relevance. d. Conservative. 105 0 obj
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This Product includes content from the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for. c. Information is measured similarly across the d. Completeness, The enhancing qualitative characteristics of B@cQZr\ :4T$NhAC@REv@y($ Quiz Solutions testbank to accompany contemporary issues in accounting michaela rankin, patricia stanton, susan mcgowan, matthew tilling, kimberly ferlauto 0000006781 00000 n
interrelated objectives and fundamentals that lead Excluding complex information just because it is difficult to understand would not result in relevant information that was faithfully presented. d. Expenditures are reported as expenses. ~ Copyright 2020. Information is relevant if either it can be used as input in processes used to identify future outcomes (i.e. trailer
information that influences the economic decision To help users understand information presented, that information should be classified, characterised and presented clearly. If all the facts and figures were not faithfully represented, then the financial information would not be relevant due to distortion, bias and lack of completeness. Neutral c. Forward looking d. Material d. Material The four enhancing qualitative characteristics recognized by the conceptual framework are: a. Materiality, comparability, timeliness, cost versus benefit b. Relevance, materiality, reliability, comparability Classification a. Understandability The Board asked the Staff to rephrase this issue so that relevance and faithful representation would not be seen as 'trumping' comparability. 0000004367 00000 n
For example, a business could report that it had a $500,000 loan as of the balance sheet date, but this would not be considered complete unless additional information about the loan were provided, such as its maturity date. information with reasonable diligence. Both relevance and faithful representation are essential characteristics. Abstract To ask if financial statements should "represent fairly" or be "relevant" gives a political dimension to the trade-off between reliability and relevance, two characteristics of. To be useful information, fair value must be relevant and also be supported by suf cient disclosure to give a faithful representation. For example, if a company reports in its balance sheet that it had $1,200,000 of accounts receivable as of the end of June, then that amount should indeed have been present on that date. However, faithfully represented information will enable users to make relevant decisions. b. Correct. 0000005914 00000 n
D A( The most notable of these gods are the planet, the sun, and the twin moons. a. c. Gains and losses should not be recognized. legal form of a transaction, the economic substance consensus. What is meant by consistency when discussing The overriding qualitative characteristic of Fig. Accountants (IESBA), published by the International Federation of Accountants (IFAC) in December 2012 and is used with permission of IFAC. (Gerard J. Tortora), The Law on Obligations and Contracts (Hector S. De Leon; Hector M. Jr De Leon), Principles of Managerial Finance (Lawrence J. Gitman; Chad J. Zutter), Unit Operations of Chemical Engineering (Warren L. McCabe; Julian C. Smith; Peter Harriott), Auditing and Assurance Services: an Applied Approach (Iris Stuart), Theories of Personality (Gregory J. Feist), Rubin's Pathology (Raphael Rubin; David S. Strayer; Emanuel Rubin; Jay M. McDonald (M.D. c. Periodicity For example, biased financial statements could be used to give an overly optimistic view of a business in order to encourage a prospective buyer to pay a higher price for it. A present, obligation may arise as a legal obligation and also as an obligation imposed by. The enhancing qualitative characteristics: matters. xGQbArGX{XU%r_n IHv+*JI 3 n/c=~}M}zX6~n^|:_LJ[|!DU"\$O/_~|o(G/@FB$t"/QtIoR&.#D,QY&~b2I?,AdIY&FP=B%$S8\I)8JPJRK c
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%U(L>)cqj!.&XZbr I am a young girl from Botswana who would be honoured to be schooling in the UK..THANK U.. Save my name, email, and website in this browser for the next time I comment. Relevance: In accounting, the term relevance means it will make a difference to a decision maker. Information is timely. Relevance and faithful representation are described as two fundamental qualitative characteristics of useful financial information, as stated in paragraph QC2 of ED: For financial information to be useful, it must possess two fundamental qualitative characteristics relevance and faithful representation. a. Relevance 0000003068 00000 n
users. Faithful representation sS0S~_O)~?/S~_H~RO"Nt =g3/^U8Aj!T f Under Israel's current constitutional framework, all legislation, government orders, and administrative actions of state bodies are subject to judicial review by the Supreme Court of Israel, which has the power to strike down legislation and reverse executive decisions it determines to be in violation of Israel's Basic Laws. The faithful representation concept should extend to all parts of the financial statements, including the results of operations, financial position, and cash flows of the reporting entity. materiality Different users use information for different purposes, so it would be very difficult if not impossible to verify that information was relevant. Information has predictive value and In short, in extremely rare circumstances framework can prevail over standards. Statement I. Complete b. and systematic manner. 0000021360 00000 n
This book defends the claims of historical-critical research into the New Testament as necessary for theological interpretation.Presenting an interdisciplinary study about the nature of theological language, this book considers the modern debate in theological hermeneutics beginning with the Barth-Bultmann debate and moving towards a theory of language which brings together historical-critical . endobj
/ the statements. None of these three statements indicates that accounting information should be presented in a simple way so that everyone can understand it. While understandability is an enhancing characteristic of accounting information, this should not be confused with simplicity. c. Comparability provide information for making economic decisions. Apr 10 2021 | 09:05 AM | Earl Stokes Verified Expert 6 Votes 8464 Answers This is a sample answer. c. Timeliness timeliness endstream
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independent of presumptions about particular enhancing quality of accounting information? clarify in Chapter 2 of the revised CF (i.e. compliance with both framework and standards is necessary but when they are in conflict then standards will be complied and for the same reason IAS 1 almost equates the fair presentation with compliance as standards are made in a way that ensure true and fair financial statements. But what if both are present but they point in different directions? readers? d. Accounting procedures should be adopted Correct. accounting information is 0000063747 00000 n
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11 and predictive value are characteristics of d. Representational faithfulness. Correct. immediately. verifiability. ?OggNCc -WB(vK*ClLk> detriment of others? 0000007504 00000 n
In this paper the two main concerns that will be addressed are those of relevance and reliability with a focus on concerns of providing a faithful representation of both annual and interim financial reports. kv"!MboZ8msGM6jcM]Qm11!AC[-^m;DII889*-.%Umjkfns/cS 5ogY^pvZvM0o 0rDAiIz(]1&uFv9kO
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d. Stable monetary unit. information an example of conservatism. But if we wait to gain while the information gains reliability, its relevance is lost. 0000003117 00000 n
profit. What is meant by comparability when discussing b. Predictive value, confirmatory value and and timeliness. c. Consistency Understandability assumes that users of financial statements have reasonable background knowledge of business and economic activities. Verifiability if information can be verified (e.g. endstream
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decision to be made is useless. conditions and events that is intended to a. a. When information about two different entities Users have a reasonable knowledge of business independent measures using the same Faithful presentation is one of the qualitative. 0000004148 00000 n
Faithful representation 9 10 Adobe d c. There is sometimes a trade-off between relevance and faithful representation . a. Relevance and financial accounting matters to understand 0000006149 00000 n
Timeliness information should be provided to users within a timescale suitable for their decision making purposes. Information that has no bearing on an economic d. Comprehensibility to users, To achieve faithful representation, the financial Relevant financial information must be capable of making a difference in the decisions made by users. 1&^Z5W
*9KCmskXs|ZuL:. Cz' It does not mean 100% accuracy because the cost of achieving it might be too high.if(typeof ez_ad_units != 'undefined'){ez_ad_units.push([[580,400],'xplaind_com-medrectangle-3','ezslot_5',105,'0','0'])};__ez_fad_position('div-gpt-ad-xplaind_com-medrectangle-3-0'); In many cases, it is easy to present information which is both relevant and which presents the transactions faithfully but in some instances, we might need to strike a balance between both requirements. Predictive Value vs. confirmatory value 3. You are welcome to learn a range of topics from accounting, economics, finance and more. 0000025357 00000 n
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it has confirmatory value) or both. This also means that no information is omitted that might have led a user to have a different opinion of the business. b. 5 / 8. be predictive and confirmatory. stream
We hope you like the work that has been done, and if you have any suggestions, your feedback is highly valuable. b. A coherent framework is a coherent system of A similar system of cross-referencing terms and concepts is employed in the glossary and index. 0000005835 00000 n
to select and apply accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Created at 10/23/2012 11:53 AM by System Account, (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London, Last modified at 11/30/2012 11:42 AM by System Account, Auditors' responsibilities regarding fraud, Auditors' responsibilities regarding laws & regulations, Reporting to those charged with governance, Reporting deficiencies in internal control systems, The components of an internal control system, The scope and regulation of audit and assurance, Critical success factors and core competences, Non-financial performance indicators (NFPIs), Theories of corporate social responsibility, Conflicts of interest and ethical threats, The consolidated statement of financial position, Controlling the Financial Reporting System, The trial balance and errors in the FR system, The Context and Purpose of Financial Reporting, International Financial Reporting Standards, Chapter 4: Types of cost and cost behaviour, Chapter 5: Ordering and accounting for inventory, Chapter 9: Marginal and absorption costing, Chapter 10: Books of prime entry and control accounts, Chapter 11: Control account reconciliations, Chapter 13: Correction of errors and suspense accounts, Chapter 18: Consolidated statement of financial position, Chapter 19: Consolidated income statement, Chapter 2: Statement of financial position and income statement, Chapter 20: Interpretation of financial statements, Chapter 21: The regulatory and conceptual framework, Chapter 7: Irrecoverable debts and allowances for receivables, Chapter 9: From trial balance to financial statements, Chapter 1: Essential elements of legal systems, Chapter 2: International business transactions: formation of the contract, Chapter 3: International business transactions: obligations, Chapter 4: International business transactions: risk and payment, Chapter 5: International business forms agency, Chapter 6: Types of Business Organisation, Chapter 7: Corporations and legal personality, Chapter 1: Traditional and advanced costing methods, Chapter 11: Performance measurement and control, Chapter 12: Divisional performance measurement and transfer pricing, Chapter 13: Performance measurement in not-for-profit organisations, Chapter 3: Planning with limiting factors, Chapter 5: Make or buy and other short-term decisions, Chapter 9: Standard costing and basic variances, Chapter 15: Additional practice questions, Chapter 4: Ethics and acceptance of appointment, Chapter 1: The financial management function, Chapter 10: Working capital management cash and funding strategies, Chapter 19: Business valuations and market efficiency, Chapter 2: Capital budgeting and basic investment appraisal techniques, Chapter 3: Investment appraisal discounted cash flow techniques, Chapter 4: Investment appraisal further aspects of discounted cash flows, Chapter 5: Asset investment decisions and capital rationing, Chapter 6: Investment appraisal under uncertainty, Chapter 8: Working capital management inventory control, Chapter 9: Working capital management accounts receivable and payable, Chapter 10: Risk and the risk management process, Chapter 13: Professional and corporate ethics, Chapter 15: Social and environmental issues, Chapter 2: Development of corporate governance, Chapter 5: Relations with shareholders and disclosure, Chapter 6: Corporate governance approaches, Chapter 7: Corporate social responsibility and corporate governance, Chapter 1: The nature of strategic business analysis, Chapter 10: The role of information technology, Chapter 12: Project management I The business case, Chapter 13: Project management II Managing the project to its conclusion, Chapter 16: Strategic development and managing strategic change, Chapter 2: The environment and competitive forces, Chapter 3: Internal resources, capabilities and competences, Chapter 4: Stakeholders, governance and ethics, Chapter 5: Strategies for competitive advantage, Chapter 6: Other elements of strategic choice, Chapter 7: Methods of strategic development, Chapter 1: The role and responsibility of the financial manager, Chapter 11: Corporate failure and reconstruction, Chapter 13: Hedging foreign exchange risk, Chapter 15: The economic environment for multinationals, Chapter 16: Money markets and complex financial instruments, Chapter 17: Topical issues in financial management, Chapter 2: Investment appraisal methods incorporating the use of free cash flows, Chapter 3: The weighted average cost of capital (WACC), Chapter 4: Risk adjusted WACC and adjusted present value, Chapter 5: Capital structure (gearing) and financing, Chapter 7: International investment and financing decisions, Chapter 9: Strategic aspects of acquisitions, Chapter 1: Introduction to strategic management accounting, Chapter 10: Non-financial performance indicators and corporate failure, Chapter 11: The role of quality in performance management, Chapter 12: Current developments in performance management, Chapter 4: Changes in business structure and management accounting, Chapter 5: The impact of information technology, Chapter 6: Performance measurement systems and design and behavioural aspects, Chapter 7: Financial performance measures in the private sector, Chapter 8: Divisional performance appraisal and transfer pricing, Chapter 9: Performance management in not-for-profit organisations, Chapter 6: Order quantities and reorder levels, The%20Consolidated%20Statement%20of%20Financial%20Position, The qualitative characteristics of financial information, The Trial Balance and Errors in the Financial Reporting System, Auditors' Responsibilities Regarding Fraud, Auditors' Responsibilities Regarding Laws and Regulations, Budgeting in not-for-profit organisations, Corporate social responsibility and management systems, Development%20of%20corporate%20governance, Environmental Management Accounting (EMA), Fitzgerald and Moon's Building Block Model, International%20Federation%20of%20Accountants, Mintzberg - The ten skills of the manager, Professional advice and negligent misstatement, The%20Code%20of%20Ethics%20for%20Professional%20Accountants, Unfair Terms in Consumer Contract Regulations 1999, Using option pricing theory to value equity, Using probability theory to determine credit spreads, ACCA P5 - Advanced Performance Management, AAT- Prepare Financial Accounts for Sole Traders and Partnerships (FSTP) Exam, AAT-Control Accounts, Journals and the Banking System(CJBS) Exam, AAT-Processing Bookkeeping Transactions(PBKT) Exam, AAT- Internal Control and Accounting Systems (ISYS), Modification Through Additional Paragraphs, Chapter 10: Working capital management cash and funding strategies. 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