|
Section 1 The Role of Accounting as an Information System |
|
|
|
Chapter 1 Environment and Theoretical Structure of Financial Accounting |
|
|
2 | (48) |
|
Part A Financial Accounting Environment |
|
|
4 | (1) |
|
The Economic Environment and Financial Reporting |
|
|
5 | (4) |
|
The Investment-Credit Decision---A Cash Flow Perspective |
|
|
6 | (1) |
|
Cash versus Accrual Accounting |
|
|
7 | (2) |
|
The Development of Financial Accounting and Reporting Standards |
|
|
9 | (10) |
|
Historical Perspective and Standards |
|
|
9 | (3) |
|
The Establishment of Accounting Standards---A Political Process |
|
|
12 | (1) |
|
|
13 | (3) |
|
|
16 | (1) |
|
Financial Reporting Reform |
|
|
16 | (2) |
|
A Move Away from Rules-Based Standards |
|
|
18 | (1) |
|
|
19 | (1) |
|
Ethics and Professionalism |
|
|
19 | (1) |
|
Analytical Model for Ethical Decisions |
|
|
19 | (1) |
|
Part B The Conceptual Framework |
|
|
20 | (1) |
|
Objective of Financial Reporting |
|
|
21 | (1) |
|
Qualitative Characteristics of Financial Reporting Information |
|
|
22 | (3) |
|
Fundamental Qualitative Characteristics |
|
|
23 | (1) |
|
Enhancing Qualitative Characteristics |
|
|
24 | (1) |
|
Practical Boundaries (Constraints) to Acheiving Desired Qualitative Characteristics |
|
|
25 | (1) |
|
|
25 | (1) |
|
|
25 | (1) |
|
|
26 | (1) |
|
Elements of Financial Statements |
|
|
26 | (1) |
|
Recognition and Measurement Concepts |
|
|
27 | (6) |
|
|
27 | (1) |
|
|
28 | (1) |
|
|
28 | (1) |
|
Broad Accounting Principles |
|
|
29 | (4) |
|
Evolution of Accounting Principles |
|
|
33 | (5) |
|
The Asset/Liability Approach |
|
|
33 | (1) |
|
The Move toward Fair Value |
|
|
34 | (4) |
|
Questions for Review of Key Topics |
|
|
38 | (1) |
|
|
38 | (1) |
|
|
39 | (4) |
|
CPA and CMA Review Questions |
|
|
43 | (2) |
|
|
45 | (5) |
|
Chapter 2 Review of the Accounting Process |
|
|
50 | (62) |
|
|
52 | (3) |
|
|
52 | (1) |
|
|
53 | (2) |
|
The Accounting Processing Cycle |
|
|
55 | (9) |
|
Concept Review Exercise: Journal Entries for External Transactions |
|
|
64 | (2) |
|
|
66 | (8) |
|
|
67 | (3) |
|
|
70 | (2) |
|
|
72 | (2) |
|
Concept Review Exercise: Adjusting Entries |
|
|
74 | (2) |
|
Preparing the Financial Statements |
|
|
76 | (3) |
|
|
76 | (1) |
|
|
77 | (1) |
|
The Statement of Cash Flows |
|
|
78 | (1) |
|
The Statement of Shareholders' Equity |
|
|
79 | (1) |
|
|
79 | (2) |
|
Concept Review Exercise: Financial Statement Preparation and Closing |
|
|
81 | (2) |
|
Conversion from Cash Basis to Accrual Basis |
|
|
83 | (4) |
|
Appendix 2A Use of a Worksheet |
|
|
87 | (1) |
|
Appendix 2B Reversing Entries |
|
|
88 | (2) |
|
Appendix 2C Subsidiary Ledgers and Special Journals |
|
|
90 | (3) |
|
Questions for Review of Key Topics |
|
|
93 | (1) |
|
|
93 | (1) |
|
|
94 | (7) |
|
|
101 | (1) |
|
|
102 | (7) |
|
|
109 | (3) |
|
Chapter 3 The Balance Sheet and Financial Disclosures |
|
|
112 | (56) |
|
|
115 | (1) |
|
Usefulness and Limitations |
|
|
115 | (1) |
|
|
116 | (7) |
|
|
116 | (4) |
|
|
120 | (1) |
|
|
121 | (2) |
|
Concept Review Exercise: Balance Sheet Classification |
|
|
123 | (1) |
|
Part B Financial Disclosures |
|
|
124 | (1) |
|
|
125 | (3) |
|
Summary of Significant Accounting Policies |
|
|
125 | (1) |
|
|
125 | (1) |
|
Noteworthy Events and Transactions |
|
|
126 | (2) |
|
Management Discussion and Analysis |
|
|
128 | (1) |
|
Management's Responsibilities |
|
|
128 | (1) |
|
|
129 | (2) |
|
Compensation of Directors and Top Executives |
|
|
131 | (1) |
|
|
132 | (1) |
|
Using Financial Statement Information |
|
|
132 | (1) |
|
|
133 | (7) |
|
|
135 | (5) |
|
Appendix 3 Reporting Segment Information |
|
|
140 | (3) |
|
Questions for Review of Key Topics |
|
|
143 | (1) |
|
|
144 | (1) |
|
|
145 | (8) |
|
CPA and CMA Review Questions |
|
|
153 | (1) |
|
|
154 | (6) |
|
|
160 | (8) |
|
Chapter 4 The Income Statement and Statement of Cash Flows |
|
|
168 | (64) |
|
Part A The Income Statement and Comprehensive Income |
|
|
170 | (1) |
|
Income from Continuing Operations |
|
|
170 | (5) |
|
Revenues, Expenses, Gains, and Losses |
|
|
170 | (2) |
|
|
172 | (1) |
|
Operating versus Nonoperating Income |
|
|
172 | (1) |
|
|
172 | (3) |
|
|
175 | (5) |
|
Manipulating Income and Income Smoothing |
|
|
175 | (1) |
|
Operating Income and Earnings Quality |
|
|
176 | (3) |
|
Nonoperating Income and Earnings Quality |
|
|
179 | (1) |
|
Separately Reported Items |
|
|
180 | (8) |
|
Intraperiod Income Tax Allocation |
|
|
180 | (2) |
|
|
182 | (4) |
|
|
186 | (1) |
|
Unusual or Infrequent Items |
|
|
187 | (1) |
|
|
188 | (4) |
|
Change in Accounting Principle |
|
|
188 | (1) |
|
Change in Depreciation, Amortization, or Depletion Method |
|
|
189 | (1) |
|
Change in Accounting Estimate |
|
|
190 | (1) |
|
Change in Reporting Entity |
|
|
191 | (1) |
|
Correction of Accounting Errors |
|
|
192 | (1) |
|
|
192 | (1) |
|
Earnings per Share Disclosures |
|
|
192 | (2) |
|
|
194 | (3) |
|
Other Comprehensive Income |
|
|
194 | (1) |
|
|
194 | (2) |
|
Accumulated Other Comprehensive Income |
|
|
196 | (1) |
|
Concept Review Exercise: Income Statement Presentation |
|
|
197 | (1) |
|
Part B The Statement of Cash Flows |
|
|
198 | (1) |
|
Usefulness of the Statement of Cash Flows |
|
|
198 | (1) |
|
|
199 | (6) |
|
|
199 | (4) |
|
|
203 | (1) |
|
|
203 | (1) |
|
Noncash Investing and Financing Activities |
|
|
204 | (1) |
|
Concept Review Exercise: Statement of Cash Flows |
|
|
205 | (4) |
|
Questions for Review of Key Topics |
|
|
209 | (1) |
|
|
209 | (2) |
|
|
211 | (7) |
|
CPA and CMA Review Questions |
|
|
218 | (1) |
|
|
219 | (6) |
|
|
225 | (5) |
|
|
230 | (1) |
|
|
231 | (1) |
|
Chapter 5 Income Measurement and Profitability Analysis |
|
|
232 | (66) |
|
Part A Revenue Recognition |
|
|
234 | (4) |
|
Revenue Recognition at Delivery |
|
|
238 | (1) |
|
|
238 | (1) |
|
|
238 | (1) |
|
Revenue Recognition after Delivery |
|
|
239 | (4) |
|
|
239 | (4) |
|
Concept Review Exercise: Installment Sales |
|
|
243 | (2) |
|
|
243 | (2) |
|
|
245 | (1) |
|
Revenue Recognition Prior to Delivery |
|
|
245 | (12) |
|
A Comparison of the Completed Contract and Percentage-of-Completion Methods |
|
|
251 | (6) |
|
Concept Review Exercise: Long-Term Construction Contracts |
|
|
257 | (1) |
|
Industry-Specific Revenue Issues |
|
|
258 | (5) |
|
Software and Other Multiple-Deliverable Arrangements |
|
|
259 | (1) |
|
|
260 | (3) |
|
Part B Profitability Analysis |
|
|
263 | (4) |
|
|
263 | (2) |
|
|
265 | (2) |
|
Profitability Analysis---An Illustration |
|
|
267 | (4) |
|
Appendix 5 Interim Reporting |
|
|
271 | (2) |
|
Questions for Review of Key Topics |
|
|
273 | (1) |
|
|
273 | (2) |
|
|
275 | (7) |
|
CPA and CMA Review Questions |
|
|
282 | (2) |
|
|
284 | (7) |
|
|
291 | (6) |
|
|
297 | (1) |
|
|
297 | (1) |
|
Chapter 6 Time Value of Money Concepts |
|
|
298 | (38) |
|
|
300 | (1) |
|
|
300 | (1) |
|
Simple versus Compound Interest |
|
|
300 | (1) |
|
Valuing a Single Cash Flow Amount |
|
|
301 | (4) |
|
Future Value of A Single Amount |
|
|
301 | (1) |
|
Present Value of a Single Amount |
|
|
302 | (2) |
|
Solving for Other Values When FV and PV are Known |
|
|
304 | (1) |
|
Concept Review Exercise: Valuing a Single Cash Flow Amount |
|
|
305 | (1) |
|
Preview of Accounting Applications of Present Value Techniques---Single Cash Amount |
|
|
306 | (2) |
|
Expected Cash Flow Approach |
|
|
308 | (1) |
|
|
309 | (1) |
|
Future Value of an Annuity |
|
|
310 | (2) |
|
Future Value of an Ordinary Annuity |
|
|
310 | (1) |
|
Future Value of an Annuity Due |
|
|
311 | (1) |
|
Present Value of an Annuity |
|
|
312 | (4) |
|
Present Value of an Ordinary Annuity |
|
|
312 | (1) |
|
Present Value of an Annuity Due |
|
|
313 | (1) |
|
Present Value of a Deferred Annuity |
|
|
314 | (2) |
|
Financial Calculators and Excel |
|
|
316 | (1) |
|
Solving for Unknown Values in Present Value Situations |
|
|
316 | (3) |
|
Concept Review Exercise: Annuities |
|
|
319 | (1) |
|
Preview of Accounting Applications of Present Value Techniques---Annuities |
|
|
320 | (2) |
|
Valuation of Long-Term Bonds |
|
|
320 | (1) |
|
Valuation of Long-Term Leases |
|
|
321 | (1) |
|
Valuation of Pension Obligations |
|
|
321 | (1) |
|
Summary of Time Value of Money Concepts |
|
|
322 | (2) |
|
Questions for Review of Key Topics |
|
|
324 | (1) |
|
|
325 | (1) |
|
|
326 | (3) |
|
CPA and CMA Review Questions |
|
|
329 | (2) |
|
|
331 | (3) |
|
|
334 | (2) |
|
Section 2 Economic Resources |
|
|
|
Chapter 7 Cash and Receivables |
|
|
336 | (58) |
|
Part A Cash and Cash Equivalents |
|
|
338 | (1) |
|
|
338 | (2) |
|
Internal Control Procedures---Cash Receipts |
|
|
339 | (1) |
|
Internal Control Procedures---Cash Disbursements |
|
|
339 | (1) |
|
Restricted Cash and Compensating Balances |
|
|
340 | (1) |
|
Decision Makers' Perspective |
|
|
341 | (1) |
|
Part B Current Receivables |
|
|
342 | (1) |
|
|
342 | (9) |
|
Initial Valuation of Accounts Receivable |
|
|
342 | (2) |
|
Subsequent Valuation of Accounts Receivable |
|
|
344 | (7) |
|
Concept Review Exercise: Uncollectible Accounts Receivable |
|
|
351 | (1) |
|
|
352 | (4) |
|
|
352 | (1) |
|
Noninterest-Bearing Notes |
|
|
353 | (2) |
|
Subsequent Valuation of Notes Receivable |
|
|
355 | (1) |
|
Financing with Receivables |
|
|
356 | (9) |
|
|
356 | (2) |
|
|
358 | (3) |
|
Transfers of Notes Receivable |
|
|
361 | (1) |
|
Deciding Whether to Account for a Transfer as a Sale or a Secured Borrowing |
|
|
361 | (1) |
|
|
362 | (3) |
|
Concept Review Exercises: Financing with Receivables |
|
|
365 | (1) |
|
Decision Makers' Perspective |
|
|
365 | (4) |
|
Appendix 7A Cash Controls |
|
|
369 | (3) |
|
Appendix 7B Impairment of a Receivable Due to a Troubled Debt Restructuring |
|
|
372 | (2) |
|
Questions for Review of Key Topics |
|
|
374 | (1) |
|
|
375 | (1) |
|
|
376 | (6) |
|
CPA and CMA Review Questions |
|
|
382 | (2) |
|
|
384 | (6) |
|
|
390 | (3) |
|
|
393 | (1) |
|
Chapter 8 Inventories: Measurement |
|
|
394 | (52) |
|
Part A Recording and Measuring Inventory |
|
|
396 | (1) |
|
|
396 | (1) |
|
|
396 | (1) |
|
Manufacturing Inventories |
|
|
396 | (1) |
|
Perpetual Inventory System |
|
|
397 | (1) |
|
Periodic Inventory System |
|
|
398 | (1) |
|
A Comparison of the Perpetual and Periodic Inventory Systems |
|
|
399 | (1) |
|
What is Included in Inventory? |
|
|
400 | (4) |
|
Physical Quantities Included in Inventory |
|
|
400 | (1) |
|
Expenditures included in Inventory |
|
|
401 | (3) |
|
Inventory Cost Flow Assumptions |
|
|
404 | (7) |
|
|
405 | (1) |
|
|
405 | (2) |
|
First-In First-Out (FIFO) |
|
|
407 | (1) |
|
|
408 | (2) |
|
Comparison of Cost Flow Methods |
|
|
410 | (1) |
|
Decision Makers' Perspective---Factors Influencing Method Choice |
|
|
411 | (3) |
|
Concept Review Exercise: Inventory Cost Flow Methods |
|
|
414 | (3) |
|
Decision Makers' Perspective |
|
|
417 | (3) |
|
Part B Methods of Simplifying LIFO |
|
|
420 | (1) |
|
|
420 | (1) |
|
|
421 | (2) |
|
|
422 | (1) |
|
|
422 | (1) |
|
The DVL Inventory Estimation Technique |
|
|
422 | (1) |
|
Concept Review Exercise: Dollar-Value LIFO |
|
|
423 | (2) |
|
Questions for Review of Key Topics |
|
|
425 | (1) |
|
|
426 | (1) |
|
|
427 | (6) |
|
CPA and CMA Review Questions |
|
|
433 | (2) |
|
|
435 | (6) |
|
|
441 | (4) |
|
|
445 | (1) |
|
Chapter 9 Inventories: Additional Issues |
|
|
446 | (54) |
|
Part A Reporting---Lower of Cost or Market |
|
|
448 | (1) |
|
|
449 | (5) |
|
Applying Lower of Cost or Market |
|
|
451 | (1) |
|
|
452 | (2) |
|
Concept Review Exercise: Lower of Cost or Market |
|
|
454 | (1) |
|
Part B Inventory Estimation Techniques |
|
|
455 | (1) |
|
|
456 | (2) |
|
|
457 | (1) |
|
The Retail Inventory Method |
|
|
458 | (5) |
|
|
459 | (1) |
|
|
460 | (2) |
|
Other Issues Pertaining to the Retail Method |
|
|
462 | (1) |
|
Concept Review Exercise: Retail Inventory Method |
|
|
463 | (2) |
|
Part C Dollar-Value LIFO Retail |
|
|
465 | (3) |
|
Concept Review Exercise: Dollar-Value LIFO Retail Method |
|
|
468 | (1) |
|
Part D Change in Inventory Method and Inventory Errors |
|
|
469 | (1) |
|
Change in Inventory Method |
|
|
469 | (3) |
|
|
469 | (2) |
|
Change to the LIFO Method |
|
|
471 | (1) |
|
|
472 | (2) |
|
When the Inventory Error is Discovered the Following Year |
|
|
473 | (1) |
|
When the Inventory Error is Discovered Subsequent to the Following Year |
|
|
473 | (1) |
|
Concept Review Exercise: Inventory Errors |
|
|
474 | (1) |
|
|
474 | (2) |
|
Appendix 9 Purchase Commitments |
|
|
476 | (2) |
|
Questions for Review of Key Topics |
|
|
478 | (1) |
|
|
479 | (1) |
|
|
480 | (7) |
|
CPA and CMA Review Questions |
|
|
487 | (2) |
|
|
489 | (5) |
|
|
494 | (3) |
|
|
497 | (1) |
|
|
498 | (1) |
|
|
498 | (2) |
|
Chapter 10 Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition |
|
|
500 | (56) |
|
Part A Valuation at Acquisition |
|
|
502 | (1) |
|
|
502 | (2) |
|
|
504 | (8) |
|
Property, Plant, and Equipment |
|
|
504 | (5) |
|
|
509 | (3) |
|
|
512 | (1) |
|
|
512 | (4) |
|
|
513 | (2) |
|
Issuance of Equity Securities |
|
|
515 | (1) |
|
|
515 | (1) |
|
Decision Makers' Perspective |
|
|
516 | (1) |
|
Part B Dispositions and Exchanges |
|
|
517 | (1) |
|
|
517 | (1) |
|
|
518 | (3) |
|
Fair Value Not Determinable |
|
|
519 | (1) |
|
Exchange Lacks Commercial Substance |
|
|
519 | (2) |
|
Concept Review Exercise: Exchanges |
|
|
521 | (1) |
|
Part C Self-Constructed Assets and Research and Development |
|
|
521 | (1) |
|
|
521 | (13) |
|
|
522 | (1) |
|
|
522 | (4) |
|
Research and Development (R & D) |
|
|
526 | (8) |
|
Appendix 10 Oil and Gas Accounting |
|
|
534 | (1) |
|
Questions for Review of Key Topics |
|
|
535 | (1) |
|
|
536 | (1) |
|
|
537 | (6) |
|
CPA and CMA Review Questions |
|
|
543 | (3) |
|
|
546 | (4) |
|
|
550 | (4) |
|
|
554 | (2) |
|
Chapter 11 Property, Plant, and Equipment and Intangible Assets: Utilization and Impairment |
|
|
556 | (62) |
|
Part A Depreciation Depletion, and Amortization |
|
|
558 | (1) |
|
Cost Allocation---An Overview |
|
|
558 | (1) |
|
Measuring Cost Allocation |
|
|
559 | (1) |
|
|
559 | (1) |
|
|
559 | (1) |
|
|
560 | (1) |
|
|
560 | (3) |
|
Time-Based Depreciation Methods |
|
|
560 | (2) |
|
Activity-Based Depreciation Methods |
|
|
562 | (1) |
|
Decision Makers' Perspective---Selecting a Depreciation Method |
|
|
563 | (2) |
|
Concept Review Exercise: Depreciation Methods |
|
|
565 | (1) |
|
Group and Composite Depreciation Methods |
|
|
566 | (3) |
|
Depletion of Natural Resources |
|
|
569 | (2) |
|
Amortization of Intangible Assets |
|
|
571 | (2) |
|
Intangible Assets Subject to Amortization |
|
|
571 | (1) |
|
Intangible Assets not Subject to Amortization |
|
|
572 | (1) |
|
Concept Review Exercise: Depletion and Amortization |
|
|
573 | (2) |
|
|
575 | (1) |
|
|
575 | (1) |
|
|
576 | (1) |
|
Change in Depreciation, Amortization, or Depletion Method |
|
|
577 | (1) |
|
|
578 | (2) |
|
|
580 | (7) |
|
Assets to Be Held and Used |
|
|
580 | (7) |
|
|
587 | (2) |
|
Impairment Losses and Earnings Quality |
|
|
588 | (1) |
|
Part C Subsequent Expenditures |
|
|
589 | (5) |
|
Expenditures Subsequent to Acquisition |
|
|
589 | (1) |
|
|
589 | (1) |
|
|
590 | (1) |
|
|
590 | (1) |
|
|
590 | (1) |
|
Costs of Defending Intangible Rights |
|
|
591 | (3) |
|
Appendix 11A Comparison with MACRS (Tax Depreciation) |
|
|
594 | (1) |
|
Appendix 11B Retirement and Replacement Methods of Depreciation |
|
|
594 | (2) |
|
Questions for Review of Key Topics |
|
|
596 | (1) |
|
|
596 | (2) |
|
|
598 | (7) |
|
CPA and CMA Review Questions |
|
|
605 | (2) |
|
|
607 | (5) |
|
|
612 | (4) |
|
|
616 | (1) |
|
|
617 | (1) |
|
Section 3 Financial Intruments and Libilities |
|
|
|
|
618 | (72) |
|
Part A Investor Lacks Significant Influence |
|
|
620 | (2) |
|
Securities to Be Held to Maturity |
|
|
622 | (3) |
|
|
625 | (4) |
|
Securities Available-for-Sale |
|
|
629 | (8) |
|
Comparison of HTM, TS, and AFS Approaches |
|
|
635 | (2) |
|
Transfers between Reporting Categories |
|
|
637 | (2) |
|
|
637 | (2) |
|
Impairment of Investments |
|
|
639 | (1) |
|
Concept Review Exercise: Various Investment Securities |
|
|
640 | (2) |
|
Financial Statement Presentation and Disclosure |
|
|
642 | (2) |
|
Part B Investor Has Significant Influence |
|
|
644 | (1) |
|
How the Equity Method Relates to Consolidated Financial Statements |
|
|
644 | (1) |
|
What Is Significant Influence? |
|
|
645 | (1) |
|
|
645 | (2) |
|
|
647 | (2) |
|
|
649 | (2) |
|
What If Conditions Change? |
|
|
651 | (3) |
|
If an Equity Method Investment Is Sold |
|
|
652 | (1) |
|
Comparison of Fair Value and Equity Methods |
|
|
652 | (1) |
|
|
653 | (1) |
|
Concept Review Exercise: The Equity Method |
|
|
654 | (2) |
|
Decision Makers' Perspective |
|
|
656 | (1) |
|
Financial Instruments and Investment Derivatives |
|
|
657 | (2) |
|
Appendix 12A Other Invesments (Special Purpose Funds Investments in Life Insurance Policies) |
|
|
659 | (1) |
|
Appendix 12B Impairment of Investments |
|
|
660 | (6) |
|
Questions for Review of Key Topics |
|
|
666 | (2) |
|
|
668 | (1) |
|
|
669 | (7) |
|
CPA and CMA Review Questions |
|
|
676 | (2) |
|
|
678 | (7) |
|
|
685 | (3) |
|
|
688 | (1) |
|
|
689 | (1) |
|
Chapter 13 Current Liabilities and Contingencies |
|
|
690 | (56) |
|
Part A Current Liabilities |
|
|
692 | (1) |
|
Characteristics of Liabilities |
|
|
692 | (1) |
|
What Is a Current Liability? |
|
|
693 | (1) |
|
|
693 | (4) |
|
Accounts Payable and Trade Notes Payable |
|
|
694 | (1) |
|
|
694 | (3) |
|
|
697 | (1) |
|
|
697 | (3) |
|
|
698 | (1) |
|
Salaries, Commissions, and Bonuses |
|
|
698 | (2) |
|
Liabilities from Advance Collections |
|
|
700 | (2) |
|
Deposits and Advances from Customers |
|
|
700 | (1) |
|
|
701 | (1) |
|
Collections for Third Parties |
|
|
702 | (1) |
|
A Closer Look at the Current and Noncurrent Classification |
|
|
702 | (2) |
|
Current Maturities of Long-Term Debt |
|
|
702 | (1) |
|
Obligations Callable by the Creditor |
|
|
702 | (1) |
|
When Short-Term Obligations Are Expected to Be Refinanced |
|
|
703 | (1) |
|
Concept Review Exercise: Current Liabilities |
|
|
704 | (1) |
|
|
705 | (1) |
|
|
706 | (10) |
|
Product Warranties and Guarantees |
|
|
708 | (2) |
|
|
710 | (1) |
|
|
711 | (2) |
|
|
713 | (2) |
|
Unasserted Claims and Assessments |
|
|
715 | (1) |
|
|
716 | (1) |
|
Concept Review Exercise: Contingencies |
|
|
717 | (2) |
|
Decision Makers' Perspective |
|
|
719 | (2) |
|
Appendix 13 Payroll-Related Liabilities |
|
|
721 | (2) |
|
Questions for Review of Key Topics |
|
|
723 | (1) |
|
|
724 | (1) |
|
|
725 | (6) |
|
CPA and CMA Review Questions |
|
|
731 | (2) |
|
|
733 | (5) |
|
|
738 | (6) |
|
|
744 | (2) |
|
Chapter 14 Bonds and Long-Term Notes |
|
|
746 | (60) |
|
The Nature of Long-Term Debt |
|
|
747 | (1) |
|
|
748 | (1) |
|
|
748 | (1) |
|
Recording Bonds at Issuance |
|
|
749 | (3) |
|
Determining the Selling Price |
|
|
750 | (2) |
|
Determining Interest---Effective Interest Method |
|
|
752 | (4) |
|
|
753 | (1) |
|
|
754 | (2) |
|
When Financial Statements Are Prepared between Interest Dates |
|
|
756 | (1) |
|
The Straight-Line Method---A Practical Expediency |
|
|
756 | (1) |
|
Concept Review Exercise: Issuing Bonds and Recording Interest |
|
|
757 | (1) |
|
|
758 | (1) |
|
|
759 | (1) |
|
|
760 | (1) |
|
Note Exchanged for Assets or Services |
|
|
760 | (2) |
|
|
762 | (1) |
|
Financial Statement Disclosures |
|
|
763 | (2) |
|
Decision Makers' Perspective |
|
|
765 | (2) |
|
Concept Review Exercise: Note with an Unrealistic Interest Rate |
|
|
767 | (2) |
|
Part C Debt Retired Early, Convertible into Stock, or Providing an Option to Buy Stock |
|
|
769 | (1) |
|
Early Extinguishment of Debt |
|
|
769 | (1) |
|
|
769 | (3) |
|
When the Conversion Option Is Exercised |
|
|
771 | (1) |
|
|
772 | (1) |
|
Bonds with Detachable Warrants |
|
|
772 | (2) |
|
Concept Review Exercise: Issuance and Early Extinguishment of Debt |
|
|
774 | (1) |
|
Part D Option to Report Liabilities at Fair Value |
|
|
775 | (4) |
|
|
775 | (1) |
|
Reporting Changes in Fair Value |
|
|
775 | (2) |
|
|
777 | (2) |
|
Appendix 14A Bonds Issued between Interest Dates |
|
|
779 | (1) |
|
Appendix 14B Troubled Debt Restructuring |
|
|
780 | (4) |
|
Questions for Review of Key Topics |
|
|
784 | (1) |
|
|
785 | (1) |
|
|
786 | (6) |
|
CPA and CMA Review Questions |
|
|
792 | (2) |
|
|
794 | (6) |
|
|
800 | (4) |
|
|
804 | (1) |
|
|
805 | (1) |
|
|
806 | (66) |
|
Part A Accounting by the Lessor and Lessee |
|
|
808 | (1) |
|
Decision Makers' Perspective---Advantages of Leasing |
|
|
808 | (1) |
|
Capital Leases and Installment Notes Compared |
|
|
809 | (1) |
|
|
810 | (5) |
|
|
811 | (2) |
|
Additional Lessor Conditions |
|
|
813 | (2) |
|
|
815 | (2) |
|
|
815 | (1) |
|
|
816 | (1) |
|
Capital Lease---Lessee and Lessor |
|
|
817 | (4) |
|
|
819 | (1) |
|
|
820 | (1) |
|
Concept Review Exercise: Direct Financing Lease |
|
|
821 | (1) |
|
|
822 | (2) |
|
Part B Bargain Purchase Options and Residual Value |
|
|
824 | (1) |
|
|
824 | (3) |
|
When a BPO is Exercisable Before the End of the Lease Term |
|
|
827 | (1) |
|
|
827 | (5) |
|
Effect on the Lessee of a Residual Value |
|
|
828 | (1) |
|
Effect on the Lessor of a Residual Value |
|
|
828 | (4) |
|
Part C Other Lease Accounting Issues |
|
|
832 | (1) |
|
|
832 | (1) |
|
|
832 | (3) |
|
When the Lessee's Incremental Borrowing Rate is Less Than the Lessor's Implicit Rate |
|
|
833 | (1) |
|
When the Lessor's Implicit Rate is Unknown |
|
|
833 | (1) |
|
Lessor's Initial Direct Costs |
|
|
834 | (1) |
|
|
835 | (1) |
|
|
835 | (1) |
|
|
835 | (3) |
|
Decision Maker's Perspective---Financial Statement Impact |
|
|
838 | (2) |
|
Balance Sheet and Income Statement |
|
|
838 | (1) |
|
Statement of Cash Flow Impact |
|
|
839 | (1) |
|
Concept Review Exercise: Various Lease Accounting Issues |
|
|
840 | (2) |
|
Part D Special Leasing Arrangements |
|
|
842 | (1) |
|
Sale-Leaseback Arrangements |
|
|
842 | (4) |
|
|
843 | (1) |
|
|
844 | (1) |
|
Losses on Sale-Leasebacks |
|
|
845 | (1) |
|
|
846 | (1) |
|
|
846 | (1) |
|
Leases of Land and Building |
|
|
846 | (1) |
|
Leases of Only Part of a Building |
|
|
846 | (1) |
|
|
846 | (2) |
|
Questions for Review of Key Topics |
|
|
848 | (1) |
|
|
849 | (1) |
|
|
850 | (7) |
|
CPA and CMA Review Questions |
|
|
857 | (2) |
|
|
859 | (7) |
|
|
866 | (3) |
|
|
869 | (1) |
|
|
870 | (2) |
|
Chapter 16 Accounting for Income Taxes |
|
|
872 | (62) |
|
Part A Deferred Tax Assets and Deferred Tax Liabilities |
|
|
874 | (1) |
|
|
874 | (1) |
|
|
875 | (1) |
|
|
875 | (7) |
|
The FASB's Balance Sheet Approach |
|
|
877 | (1) |
|
Types of Temporary Differences |
|
|
878 | (4) |
|
|
882 | (3) |
|
|
885 | (1) |
|
|
886 | (3) |
|
Concept Review Exercise: Temporary and Permanent Differences |
|
|
889 | (1) |
|
Part B Other Tax Accounting Issues |
|
|
890 | (1) |
|
|
890 | (2) |
|
When Enacted Tax Rates Differ |
|
|
890 | (1) |
|
Changes in Tax Laws or Rates |
|
|
891 | (1) |
|
Multiple Temporary Differences |
|
|
892 | (2) |
|
|
894 | (3) |
|
Operating Loss Carryforward |
|
|
895 | (1) |
|
|
896 | (1) |
|
Financial Statement Presentation |
|
|
897 | (3) |
|
Balance Sheet Classification |
|
|
897 | (1) |
|
|
898 | (2) |
|
Coping with Uncertainty in Income Taxes |
|
|
900 | (2) |
|
Intraperiod Tax Allocation |
|
|
902 | (2) |
|
Decision Makers' Perspective |
|
|
904 | (1) |
|
Concept Review Exercise: Multiple Differences and Operating Loss |
|
|
905 | (3) |
|
Questions for Review of Key Topics |
|
|
908 | (1) |
|
|
909 | (2) |
|
|
911 | (7) |
|
CPA and CMA Review Questions |
|
|
918 | (2) |
|
|
920 | (6) |
|
|
926 | (5) |
|
|
931 | (1) |
|
|
932 | (2) |
|
Chapter 17 Pensions and Other Postretirement Benefits |
|
|
934 | (72) |
|
Part A The Nature of Pension Plans |
|
|
936 | (2) |
|
Defined Contribution Pension Plans |
|
|
938 | (1) |
|
Defined Benefit Pension Plans |
|
|
939 | (1) |
|
Pension Expense---An Overview |
|
|
940 | (1) |
|
Part B The Pension Obligation and Plan Assets |
|
|
941 | (1) |
|
|
941 | (6) |
|
Accumulated Benefit Obligation |
|
|
941 | (1) |
|
Vested Benefit Obligation |
|
|
941 | (1) |
|
Projected Benefit Obligation |
|
|
942 | (5) |
|
Illustration Expanded to Consider the Entire Employee Pool |
|
|
947 | (1) |
|
|
947 | (2) |
|
Reporting the Funded Status of the Pension Plan |
|
|
949 | (1) |
|
Part C Determining Pension Expense |
|
|
949 | (1) |
|
The Relationship between Pension Expense and Changes in the PBO and Plan Assets |
|
|
949 | (6) |
|
Components of Pension Expense |
|
|
951 | (2) |
|
|
953 | (2) |
|
|
955 | (1) |
|
Recording Gains and Losses |
|
|
955 | (1) |
|
Recording the Pension Expense |
|
|
956 | (2) |
|
Recording the Funding of Plan Assets |
|
|
958 | (2) |
|
|
960 | (1) |
|
Income Tax Considerations |
|
|
961 | (1) |
|
Putting the Pieces Together |
|
|
962 | (1) |
|
Decision Makers' Perspective |
|
|
963 | (1) |
|
Settlement or Curtailment of Pension Plans |
|
|
963 | (1) |
|
Concept Review Exercise: Pension Plans |
|
|
964 | (2) |
|
Part E Postretirement Benefits Other Than Pensions |
|
|
966 | (1) |
|
What is a Postretirement Benefit Plan? |
|
|
967 | (2) |
|
Postretirement Health Benefits and Pension Benefits Compared |
|
|
967 | (1) |
|
Determining the Net Cost of Benefits |
|
|
968 | (1) |
|
Postretirement Benefit Obligation |
|
|
969 | (1) |
|
|
969 | (1) |
|
|
969 | (1) |
|
Accounting for Postretirement Benefit Plans Other Than Pensions |
|
|
970 | (3) |
|
A Comprehensive Illustration |
|
|
972 | (1) |
|
Decision Makers' Perspective |
|
|
973 | (1) |
|
Concept Review Exercise: Other Postretirement Benefits |
|
|
974 | (3) |
|
Appendix 17 Service Method of Allocating Prior Service Cost |
|
|
977 | (1) |
|
Questions for Review of Key Topics |
|
|
978 | (1) |
|
|
979 | (1) |
|
|
980 | (9) |
|
CPA and CMA Review Questions |
|
|
989 | (1) |
|
|
990 | (8) |
|
|
998 | (5) |
|
|
1003 | (1) |
|
|
1004 | (2) |
|
Chapter 18 Shareholders' Equity |
|
|
1006 | (62) |
|
Part A The Nature of Shareholders' Equity |
|
|
1008 | (1) |
|
Financial Reporting Overview |
|
|
1008 | (7) |
|
|
1009 | (1) |
|
|
1010 | (1) |
|
|
1010 | (1) |
|
Accumulated Other Comprehensive Income |
|
|
1010 | (2) |
|
Reporting Shareholders' Equity |
|
|
1012 | (3) |
|
The Corporate Organization |
|
|
1015 | (2) |
|
|
1015 | (1) |
|
|
1015 | (1) |
|
|
1015 | (1) |
|
|
1016 | (1) |
|
|
1016 | (1) |
|
The Model Business Corporation Act |
|
|
1016 | (1) |
|
|
1017 | (1) |
|
|
1017 | (1) |
|
Distinguishing Classes of Shares |
|
|
1017 | (3) |
|
Typical Rights of Preferred Shares |
|
|
1018 | (1) |
|
Is It Equity or Is It Debt? |
|
|
1019 | (1) |
|
|
1020 | (1) |
|
Accounting for the Issuance of Shares |
|
|
1020 | (3) |
|
|
1020 | (1) |
|
Shares Issued for Noncash Consideration |
|
|
1021 | (1) |
|
More Than One Security Issued for a Single Price |
|
|
1021 | (1) |
|
|
1022 | (1) |
|
Concept Review Exercise: Expansion of Corporate Capital |
|
|
1023 | (1) |
|
|
1024 | (1) |
|
Decision Makers' Perspective |
|
|
1024 | (4) |
|
Shares Formally Retired or Viewed as Treasury Stock |
|
|
1025 | (1) |
|
Accounting for Retired Shares |
|
|
1026 | (1) |
|
Accounting for Treasury Stock |
|
|
1027 | (1) |
|
|
1028 | (1) |
|
Concept Review Exercise: Treasury Stock |
|
|
1028 | (3) |
|
|
1031 | (1) |
|
Characteristics of Retained Earnings |
|
|
1031 | (1) |
|
|
1031 | (2) |
|
|
1031 | (1) |
|
Retained Earnings Restrictions |
|
|
1032 | (1) |
|
|
1032 | (1) |
|
|
1033 | (1) |
|
Stock Dividends and Splits |
|
|
1033 | (4) |
|
|
1033 | (2) |
|
|
1035 | (1) |
|
Stock Splits Effected in the Form of Stock Dividends (Large Stock Dividends) |
|
|
1035 | (2) |
|
Decision Makers' Perspective |
|
|
1037 | (1) |
|
Concept Review Exercise: Changes in Retained Earnings |
|
|
1038 | (4) |
|
Appendix 18 Quasi Reorganizations |
|
|
1042 | (2) |
|
Questions for Review of Key Topics |
|
|
1044 | (1) |
|
|
1044 | (2) |
|
|
1046 | (7) |
|
CPA and CMA Review Questions |
|
|
1053 | (1) |
|
|
1054 | (6) |
|
|
1060 | (6) |
|
|
1066 | (1) |
|
|
1066 | (2) |
|
Section 4 Additional Financial Reporting Issues |
|
|
|
Chapter 19 Share-Based Compensation and Earnings Per Share |
|
|
1068 | (68) |
|
Part A Share-Based Compensation |
|
|
1070 | (1) |
|
|
1070 | (1) |
|
|
1071 | (9) |
|
Expense---The Great Debate |
|
|
1072 | (1) |
|
Recognizing the Fair Value of Options |
|
|
1073 | (2) |
|
When Options are Exercised |
|
|
1075 | (1) |
|
When Unexercised Options Expire |
|
|
1075 | (2) |
|
Plans with Graded Vesting |
|
|
1077 | (2) |
|
Plans with Performance or Market Conditions |
|
|
1079 | (1) |
|
Employee Share Purchase Plans |
|
|
1080 | (1) |
|
Decision Markers' Perspective |
|
|
1080 | (1) |
|
Concept Review Exercise: Share-Based Compensation Plans |
|
|
1081 | (1) |
|
Part B Earnings Per Share |
|
|
1082 | (1) |
|
|
1083 | (4) |
|
|
1083 | (1) |
|
Stock Dividends and Stock Splits |
|
|
1084 | (1) |
|
|
1085 | (1) |
|
Earnings Available to Common Shareholders |
|
|
1086 | (1) |
|
Diluted Earnings Per Share |
|
|
1087 | (5) |
|
|
1087 | (1) |
|
Options, Rights, and Warrants |
|
|
1087 | (1) |
|
|
1088 | (4) |
|
|
1092 | (3) |
|
|
1092 | (1) |
|
|
1093 | (1) |
|
Order of Entry for Multiple Convertible Securities |
|
|
1093 | (2) |
|
Concept Review Exercise: Basic and Diluted EPS |
|
|
1095 | (1) |
|
|
1096 | (6) |
|
Components of the "Proceeds" in the Treasury Stock Method |
|
|
1096 | (1) |
|
Contingently Issuable Shares |
|
|
1097 | (1) |
|
Summary of the Effect of Potential Common Shares on Earnigs per Share |
|
|
1098 | (1) |
|
|
1099 | (1) |
|
Financial Statement Presentation of Earnings Per Share Data |
|
|
1100 | (2) |
|
Decision Makers' Perspective |
|
|
1102 | (2) |
|
Concept Review Exercise: Additional EPS Issues |
|
|
1104 | (3) |
|
Appendix 19A Option-Pricing Theory |
|
|
1107 | (1) |
|
Appendix 19B Stock Appreciation Rights |
|
|
1108 | (3) |
|
Questions for Review of Key Topics |
|
|
1111 | (1) |
|
|
1112 | (1) |
|
|
1113 | (6) |
|
CPA and CMA Review Questions |
|
|
1119 | (2) |
|
|
1121 | (6) |
|
|
1127 | (7) |
|
|
1134 | (1) |
|
|
1134 | (2) |
|
Chapter 20 Accounting Changes and Error Corrections |
|
|
1136 | (46) |
|
Part A Accounting Changes |
|
|
1138 | (1) |
|
Change in Accounting Principle |
|
|
1139 | (1) |
|
Decision Makers' Perspective---Motivation for Accounting Choices |
|
|
1139 | (7) |
|
The Retrospective Approach: Most Changes in Accounting Principle |
|
|
1141 | (3) |
|
|
1144 | (2) |
|
Change in Accounting Estimate |
|
|
1146 | (2) |
|
Changing Depreciation, Amortization, and Depletion Methods |
|
|
1147 | (1) |
|
Change in Reporting Entity |
|
|
1148 | (1) |
|
|
1149 | (1) |
|
Concept Review Exercise: Accounting Changes |
|
|
1150 | (2) |
|
Part B Correction of Accounting Errors |
|
|
1152 | (1) |
|
|
1152 | (1) |
|
Error Correction Illustrated |
|
|
1153 | (6) |
|
Error Discovered in the Same Reporting Period That It Occurred |
|
|
1153 | (1) |
|
Error Affecting Previous Financial Statements, but Not Net Income |
|
|
1154 | (1) |
|
Error Affecting a Prior Year's Net Income |
|
|
1154 | (5) |
|
Concept Review Exercise: Correction of Errors |
|
|
1159 | (2) |
|
Questions for Review of Key Topics |
|
|
1161 | (1) |
|
|
1161 | (1) |
|
|
1162 | (6) |
|
CPA and CMA Review Questions |
|
|
1168 | (2) |
|
|
1170 | (7) |
|
|
1177 | (5) |
|
Chapter 21 The Statement of Cash Flows Revisited |
|
|
1182 | |
|
Part A The Content and Value of the Statement of Cash Flows |
|
|
1184 | (1) |
|
Decision Makers' Perspective---Usefulness of Cash Flow Information |
|
|
1184 | (1) |
|
Cash Inflows and Outflows |
|
|
1184 | (1) |
|
Role of the Statement of Cash Flows |
|
|
1185 | (9) |
|
The Importance of Cash Flows in an Economic Decline |
|
|
1187 | (1) |
|
Cash and Cash Equivalents |
|
|
1187 | (1) |
|
Primary Elements of the Statement of Cash Flows |
|
|
1188 | (6) |
|
Preparation of the Statement of Cash Flows |
|
|
1194 | (3) |
|
Part B Preparing an SCF: The Direct Method of Reporting Cash Flows from Operating Activities |
|
|
1197 | (1) |
|
|
1197 | (17) |
|
Income Statement Accounts |
|
|
1199 | (8) |
|
|
1207 | (7) |
|
Concept Review Exercise: Comprehensive Review |
|
|
1214 | (4) |
|
Part C Preparing an SCF: The Indirect Method of Reporting Cash Flows from Operating Activities |
|
|
1218 | (1) |
|
Getting There through the Back Door |
|
|
1218 | (1) |
|
Components of Net Income That Do Not Increase or Decrease Cash |
|
|
1219 | (1) |
|
Components of Net Income That Do Increase or Decrease Cash |
|
|
1219 | (1) |
|
Comparison with the Direct Method |
|
|
1220 | (1) |
|
Reconciliation of Net Income to Cash Flows from Operating Activities |
|
|
1221 | (2) |
|
Decision Makers' Perspective---Cash Flow Ratios |
|
|
1223 | (2) |
|
Appendix 21A Spreadsheet for the Indirect Method |
|
|
1225 | (4) |
|
Appendix 21B The T-Account Method of Preparing the Statement of Cash Flows |
|
|
1229 | (2) |
|
Questions for Review of Key Topics |
|
|
1231 | (1) |
|
|
1232 | (1) |
|
|
1233 | (9) |
|
CPA and CMA Review Questions |
|
|
1242 | (2) |
|
|
1244 | (12) |
|
|
1256 | (7) |
|
|
1263 | (1) |
|
|
1263 | |
Appendix A Derivatives |
|
0 | (1) |
Appendix B Dell Annual Report |
|
1 | |
Appendix C IFRS Comprehensive Case |
|
Glossary |
|
0 | (1) |
Photo Credits |
|
1 | |
Index |
|
0 | (1) |
Present and Future Value Tables |
|
1 | |