Data Analytics

Businesses have experienced significant change in the last several decades due to the increased use of new technologies ranging from data analytics and Blockchain to machine learning and artificial intelligence. In response to the changing demands of the business world, the AACSB has incorporated data analytics requirements within its educational framework. More recently, the AICPA and NASBA have underscored the importance of data analytics by making it a significant element in the CPA Evolution Model Curriculum.  The consensus suggests that students entering the accounting profession (or the business world more generally) need an understanding and working knowledge of data analytics to compete for the best jobs.

In recognition of the increasing importance of data analytics, the Fifth Edition includes assignments in myBusinessCourse that help students develop their data analytics skills. The assignments use Excel and Tableau to hone analysis and visualization skills. In addition, Appendix A at the end of the book provides an overview of data analytics, data visualization, and best practices for the effective display of data.

Welcome to the Fifth Edition of Advanced Accounting!

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-based 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.

CPA Evolution Model Curriculum

In spring 2020, the AICPA and NASBA boards of directors voted in favor of the CPA Evolution initiative, which is an effort to ensure that the CPA credential continues to ref lect the rapidly changing skills and competencies accounting professionals will need in the future. As part of this effort, starting in 2024, the Uniform CPA Exam will be comprehensively revised to include core skills in accounting, auditing, tax and technology.  In preparation for this transition, the AICPA and NASBA released in 2021 a CPA Evolution Model Curriculum, which provides an example of the types of knowledge and skills students should develop during their undergraduate and graduate studies.

• Chapter 1: Classify, measure, account for, and report investments in financial instruments using appropriate technology (Section 1, Module 2, Topic 6)
• Chapters 2-6: Recall more complex consolidated concepts and terms and prepare a set of consolidated financial statements using appropriate technology (Section 1, Module 2, Topic 2)
• Chapter 3: Identify and calculate goodwill and other indefinite-lived intangible assets reported in the financial statements and prepare entries (Section 1, Module 3, Topic 1)
• Chapters 2-6: Define concepts of and prepare journal entries to account for business combinations using appropriate technology (Section 1, Module 4, Topic 1)
• Chapter 7: Identify characteristics of derivatives and hedge accounting and prepare journal entries under hedge accounting for derivative financial instruments using appropriate technology (Section 1, Module 4, Topic 2)
• Chapter 8: Define foreign currency translation concepts and calculate gains or losses from translation of foreign currencies using appropriate technology (Section 1, Module 4, Topic 3)
• Chapters 9-10: Various topics related to governmental accounting, including state and local government financial reporting, government-wide financial statements, individual fund statements, the annual comprehensive financial report, government component units, budgets and encumbrances, and fund balances and interfund activities (Section 1, Module 6, Topics 1-6)
• Chapter 11: Various topics related to not-for-profit (NFP) accounting, including preparing a statement of financial position, statement of activities, statement of cash f lows and required disclosures, and accounting for nonreciprocal transfers (Section 1, Module 5, Topics 1-5)
• Chapter 12: Prepare financial statement note disclosures for reportable segments (Section 1, Module 2, Topic 3)
• Chapter 12: List requirements and financial statements related to for-profit entity financial reporting, such as Securities and Exchange Commission (SEC) requirements (Section 1, Module 1, Topic 6)
• Chapter 13: Although covered in the tax modules in the CPA Evolution Model Curriculum, fundamentals related to partnership formation, realignment and liquidation will continue to be included on the Uniform CPA Exam (Section 3, Module 7, Topics 1-6)
• End of chapter questions across all chapters: explain accounting research and applications (Section 1, Module 1, Topic 1)

Pedagogical Hallmarks Of Our Approach

Advanced accounting is a challenging course for most  students. To help students succeed, we use a number of proven pedagogical devices throughout the textbook that we have developed and refined over five editions.

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.

Easy-To-Remember Mnemonic and Pedagogical Use of Color

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. In addition, we use a consistent set of colors for each type of journal entry to make it easy for students to trace the various amounts in consolidation worksheets.

FASB Codification Throughout

We wrote our text after implementation of the FASB’s (and GASB’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 Codification-related research assignments in our end-of-chapter problem sets.

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.

• Consolidation chapters—Hulu, Coca-Cola, Cummins, Exxon Mobil, Alcoa, Walt Disney
• Foreign currency, derivatives, and consolidation of foreign subsidiaries—Coca-Cola, Starbucks
• Government and NFP—Town of Acton, MA and United Way Worldwide
• 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 real- world 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.

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:

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.

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.

New to the Fifth Edition

• Data Analytics:  Due Due to the increasing interest in data analysis technology, we have added a new end of book appendix (Appendix A) on Data Analytics and Blockchain. In addition, new Data Analytics and Data Visualization assignments are included in nearly every chapter. These assignments are in MBC and are auto graded.
• Strong Excel skills have always been an indication of career readiness. To help students develop relevant Excel skills in accounting, we have added Excel assignments to many chapters. In addition, we have created short Excel tutorial videos that demonstrate essential Excel functionality. Excel assignments and videos are accessible through MBC and are auto graded.
• CPA prep content: Cambridge Business Publishers has partnered with Gleim CPA Review, the trusted leader in CPA Exam preparation for over 45 years, to provide students with CPA prep materials that will give them a competitive advantage as they transition from the accounting classroom to taking the CPA Exam. Multiple choice questions and solutions from Gleim are available within MBC. In addition, simulations and practice tests are available for free from Gleim.
• Goodwill impairment model completely updated for simplified approach required after 2021.
• Includes newly created Integrated Comprehensive Review problems across chapters 2-6. Goes from acquisition date fact set to post-acquisition consolidation with intercompany profits and noncontrolling interest.
• New cost-method Comprehensive Review problems across chapters 2-6, with fact sets that mir- ror the Equity Method Comprehensive Review problems. Facilitates direct comparison across the two bookkeeping approaches to allow students to identify points of similarities and differences.
• Extensive revisions to Chapter 7 (Derivatives and Hedging) to simplify discussion.
• All Topic Review problems and all end-of-chapter multiple choice, exercises, and problems have been revised and updated. Added more than 25 new multiple choice items.
• MBC assets have been expanded and improved. More assignments are available in the 5th edition MBC course. All revisions have been prepared by and/or overseen by the authors to ensure consistency with the text.

Teaching Supplements

• myBusinessCourse:  A web-based learning and assessment program intended to complement your textbook and classroom instruction. This easy-to-use course management system grades homework automatically and provides students with additional help when you are not available. In addition, detailed diagnostic tools assess class and individual performance. myBusinessCourse is ideal for online courses or traditional face-to-face courses for which you want to offer students more resources to succeed. Assignments with the MBC Homework icon the margin are available in myBusinessCourse.
• Solutions Manual: We have a complete solutions manual for each chapter that has been developed by the authors.
• PowerPoint: We have instructional PowerPoint slides for each chapter that have been developed by the authors.
• Test Bank: The test bank includes multiple-choice items, exercises, and problems.
• Excel Spreadsheets: We have Excel solution spreadsheets available for all of the consolidation-related problems and for problems in our fund accounting and government-wide financial statements chapters.
  These spreadsheets support the preparation of consolidated financial statements, for the governmental accounting chapters, from a trial balance and related journal entries.