Welcome to the Third edition of Advanced Accounting. Our goal in writing this book was to satisfy the needs of today’s accounting students by providing the most contemporary, relevant, engaging, and student-oriented textbook available. We think that we have accomplished that objective by maintaining a conceptually rigorous discussion of the material in an intuitive and student-friendly style. Prior to writing this book, we both taught advanced financial accounting for many years, and we both felt that the structure and format of available textbooks contributed to the difficulties that our students have had in learning the material. several examples come to mind:

1. Too many issues discussed simultaneously. Taken individually, consolidation issues can be difficult for students to grasp. The learning process is made all the more difficult when a particular topic (intercompany sales of assets, for example) is presented using alternative methods of pre-consolidation equity investment bookkeeping (e.g., equity, partial equity, and cost). Our experience—and the experience of many of our focus group participants—indicates that students are generally confused by the mixing of bookkeeping approaches in the main-chapter discussion of most textbooks. To address this issue, we present only two pre-consolidation bookkeeping approaches: equity method and cost method. In each consolidations-related chapter, we begin the consolidations-related discussion with the equity method because it provides the clearest and easiest-to-understand linkage between the parent’s pre-consolidation financial statements and the consolidated financial statements. We then use a page-edge border to very clearly mark the pages in which we discuss cost-method consolidations procedures. By clearly distinguishing between the two approaches, we make it much easier for instructors and students to know exactly which approach we are covering. In addition, this makes tailoring the material much easier. For example, if an instructor wishes to only cover the equity method of pre-consolidation bookkeeping, the easy-to-follow chapter set-up makes this possible.
2. Mechanics versus intuition. After completing our courses and entering the working world, our former students have encountered many different consolidation approaches used by their employers and clients. Given the diversity of processes and procedures in practice, we adjusted our own teaching styles to emphasize an intuitive understanding of the concepts over the rote memorization of static journal-entry approaches. unfortunately, the available textbooks were mostly written with a mechanical perspective. in writing this text, we incorporated our teaching-based observations. In each chapter, we initially focus on conceptual explanations and discuss mechanics only after we convey an intuitive perspective on each topic. In addition, to help students immediately identify each of the various consolidation entries, we consistently color-code the C-E-A-D-I consolidation entries throughout the chapter discussion, the consolidation-entry listings, and in the consolidation worksheets.
3. Connection between fund-base statements and government-wide statements. Most texts combine, in a single chapter, fund-based accounting and government-wide financial statements, and do not demonstrate how government-wide statements are generated from fund-based accounting. We address this issue by covering these topics in two separate chapters, and we focus on the adjustments necessary to create government-wide financial statements described in the reconciliations from fund statements to government-wide statements. We present this material within the context of an actual new england town. The town is large enough to demonstrate the accounting concepts, yet small enough to avoid obscuring the learning process with unnecessary complexity.
4. Not written for students. Many texts are written using overly technical language. Our text, while rigorous, is written in a student-friendly, conversational style that makes the material much easier for students to comprehend and apply.

This book is the product of extensive market research including focus groups, market surveys, class tests, manuscript reviews, and interviews with faculty from across the country. We are grateful for the feedback from faculty who reviewed, and students who studied, early drafts of our text.

For overviews of the textbook, table of contents, features and end of chapter material, please watch the videos below.

The following clip provides an overview of the textbook prepared by the author and the series of videos created about the textbook.

The key pedagogical features utilized throughout the book are reviewed in the following video.

A quick review of the TOC and approach of the textbook is highlighted in the following video.

The End of Chapter material and Assignments are reviewed in the following video.

Target Audience

Advanced Accounting is intended for use in undergraduate and graduate accounting programs that include a course in advanced accounting as part of the curriculum. This book is especially written for advanced accounting courses in which an intuitive understanding of the material, in addition to accounting mechanics, is emphasized. Feedback from students who used our text, and subsequently completed the uniform CPA exam, has been extremely positive. They report that they felt well-prepared for the portions of the exam relating to advanced financial accounting topics.

The examples in this textbook reinforced well the theoretical concepts discussed in the chapters. The understanding I gained after using this textbook helped prepare me well for some of the toughest material in the CPA Exam.

Jon Slebodnick—Audit Associate, Deloitte

Emphasis on Intuition

We introduce topics by discussing the intuition behind accounting standards before discussing the mechanics of the accounting process. In addition, we intentionally deemphasize memorization of journal entry mechanics. We believe that this approach allows students to better understand the material and to develop relevant transferrable knowledge.

The advanced accounting textbook provided a clear and concise presentation of not only how certain accounting concepts are applied, but also why they are important and pertain to us directly.

Dan Brown—Audit Associate, PriceWaterhouseCoopers

Easy-to-Remember Mnemonic

Although our text emphasizes the intuition underlying the consolidation process, we also introduce the C-E-A-D-I (pronounced “seedy”) consolidation journal entry sequence to assist students in learning the mechanics of consolidation. The sequence systematically eliminates the book value of subsidiary equity (C, E), establishes the fair value adjustments for subsidiary net assets (A, D), and eliminates intercompany transactions and balances (I). Over the years, we’ve observed that this easy-to-remember mnemonic improves students’ understanding of consolidations and allows for easier recall of each step of the consolidation adjustment process.

FASB Codification Throughout

We wrote our text after implementation of the FASB’s Codification and we integrated the Codification throughout, including end-of-chapter problem assignments. Unlike many advanced accounting textbooks, we cite passages of the Codification frequently so that students can become familiar with the actual language of the standards, not just the authors' summary of the standards. This also allows students to easily find the relevant passages on their own. In addition, to familiarize students with the Codification search engine and to better develop their research skills, we also include numerous FASB Codification-related research assignments in our end-of-chapter problem sets.

CPA Exam Questions

The primary purpose of the Advanced Accounting course at most universities it to prepare accounting majors for the CPA exam. To provide students with relevant practice, we have included a number of multiple choice questions in each chapter that have been adapted from past CPA exams. We are grateful to the AiCPA for granting us permission to use former CPA exam questions for this purpose.

IFRS Coverage

Accounting students must become familiar with IFRS. Fortunately, the current accounting standards relating to the main topic of the book business combinations and consolidation were written jointly by the FASB and the IASB, and are 99% equivalent. In addition, other standards (e.g., segment reporting) are similar, but have key differences. In the text, we discuss the IFRS equivalent of accounting standards and highlight the differences between the two sets of accounting standards when they occur. These discussions are identified with the IFRS icon.

Relevance and Engagement

Advanced accounting is a challenging topic. We have adopted a number of techniques in our book to make the material relevant and engaging to students. These techniques include:

Focus Companies for Each Chapter

Each chapter incorporates a “focus company” for special emphasis and demonstration. We chose companies that illustrate the topic of the chapter so that students can learn the material within context. In addition, our chapters on governmental accounting are written around a small new england town that is large enough to effectively communicate the concepts of governmental accounting, yet small enough not to obscure those concepts in unnecessary complexity. The following are the focus companies we use to introduce our topics:

Consolidation chapters

AT&T, Coca-Cola, Cummins, Krispy Kreme, Alcoa, Walt Disney

Foreign currency, derivatives and consolidation of foreign subsidiaries

Coca-Cola

Government and NFP

Town of Acton, MA and the American Red Cross

Segments

3M Company

Partnerships

Boardwalk Pipeline Partners, LLP

Real company Data in Text and Assignments

We believe that an important part of the learning process involves the application of concepts to realworld data. We include references to actual footnotes in the body of our text and also include a number of end-of-chapter problems that are written around actual footnote disclosures. These problems allow students to think about accounting concepts more broadly (i.e., less mechanically) and from the perspective of the users of financial statements.

This book was very engaging and simple to follow, which made for a more enjoyable class! The examples and exhibits do a great job supporting the text to better retain the information.

Moises Numa— Audit Associate, Deloitte

Class-Tested Content

The following is a typical example:

Practice Insight Boxes

We provide a number of Practice insight Boxes resulting from interviews with practicing accountants and financial managers. These boxes provide students with insight into issues that accountants face in the real world, and with a glimpse into the types of decisions that practicing accountants must make. The following is a typical example:

Mid-Chapter and Chapter-End Reviews

Advanced accounting concepts can be challenging. To reinforce concepts presented in each chapter and to ensure student comprehension, we include topic reviews that require students to recall and apply the financial accounting techniques and concepts described in each chapter.

Readability

Our text is written with rigorous content, but in a student-friendly conversational style that facilitates the learning process. Previous textbooks by the authors have met with extremely positive reviews for writing quality, and students who have used our textbook comment on the relative ease with which they are able to assimilate the material.