Financial Accounting using IFRS, 3e

by Wong, Hanlon, Magee, Pfeiffer

| ISBN: 978-1-61853-508-5 | Copyright 2023

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Welcome to the third edition of Financial Accounting using IFRS.

We wrote this book to equip students with the accounting techniques and insights necessary to succeed in todays global business environment. It ref lects our combined experience in teaching financial accounting to students at all levels and in several countries. For anyone who pursues a career in business, the ability to read, analyse, and interpret published financial reports is an essential skill. Financial Accounting using IFRS is written for future business leaders who want to understand how financial statements are prepared and how the information in published financial reports is used by investors, creditors, financial analysts, and managers. Our goal is to provide the most engaging, relevant, and accessible textbook available.


Financial Accounting using IFRS is intended for use in the first financial accounting course at either the undergraduate or graduate level at universities that want to teach IFRS (U.S. GAAP is not covered). This book balances the preparation of financial statements with their analysis and interpretation. This book accommodates mini-courses lasting only a few days as well as extended courses lasting a full semester.

Financial Accounting using IFRS is real-world oriented and focuses on the most salient aspects of accounting. It teaches students how to read, analyse, and interpret financial accounting data to make informed business decisions. To that end, it consistently incorporates real company data, both in the body of each chapter and throughout the assignment material.


Today’s business students must be skilled in using real financial statements to make business decisions. We feel strongly that the more exposure students get to real financial statements, the more comfortable they become with the variety in financial statements that exists across companies and industries. Through their exposure to various financial statements, students will learn that, while financial statements do not all look the same, they can readily understand and interpret them to make business decisions. Furthermore, todays students must have the skills to go beyond basic financial statements to interpret and apply nonfinancial disclosures, such as footnotes and supplementary reports. We expose students to the analysis and interpretation of real company data and nonfinancial disclosures through the use of focus companies in each chapter, the generous incorporation of footnotes, financial analysis discussions in nearly every chapter, and an abundance of assignments that draw on real company data and disclosures.

Focus Companies for Each Chapter

Each chapter’s ccontent is explained through the accounting and reporting activities of real companies. Each chapter incorporates a “focus company for special emphasis and demonstration. The enhanced instructional value of focus companies comes from the way they engage students in real analysis and interpretation. Focus companies were selected based on student appeal and the diversity of countries and industries.

Chapter 1Roche (Switzerland)Chapter 7Samsung Electronics (South Korea)
Chapter 2Canada Goose (Canada)Chapter 8Unilever (The Netherlands and United Kingdom)
Chapter 3Canada Goose (Canada)Chapter 9Inditex (Spain)
Chapter 4TomTom (The Netherlands)Chapter 10SoftBank Group (Japan)
Chapter 5VTech (Hong Kong)Chapter 11Qantas Airways (Australia)
Chapter 6Airbus (France and Germany)Chapter 12Vodafone (United Kingdom)

Footnotes and Management Disclosures

We incorporate footnote and other management disclosures, where appropriate, throughout the book. We explain the significance of the footnote and then demonstrate how to use the disclosed information to make managerial inferences and decisions. A representative sample follows.

Financial Analysis Discussions

Each chapter includes a financial analysis discussion that introduces key ratios and applies them to the financial statements of the chapters focus company. By weaving some analysis into each chapter, we try to instill in students a deeper appreciation for the significance of the accounting methods being discussed. One such analysis discussion follows.

Assignments that Draw on Real Data

It is essential for students to be able to apply what they have learned to real financial statements. Therefore, we have included an abundance of assignments in each chapter that draw on recent, real data and disclosures. These assignments are readily identified by an icon in the margin that includes the companys name and its country of origin. A representative example follows.


As instructors of introductory financial accounting, we recognise that the first financial accounting course serves the general business students as well as potential accounting majors. Financial Accounting using IFRS embraces this reality. This book balances financial reporting, analysis, interpretation, and decision making with the more standard aspects of accounting such as journal entries, T-accounts, and the preparation of financial statements.

3-Step Process: Analyse, Journalise, Post

One technique we use throughout the book to maintain a balanced approach is the incorporation of a 3-step process to analyse and record transactions. Step 1 analyses the impact of various transactions on the financial statements using the financial statement effects template. Step 2 records the transaction using journal entries and Step 3 requires students to post the journal entries to T-accounts.

The template ccaptures each transactions effects on the four financial statements: the balance sheet, income statement, statement of changes in equity, and statement of cash flows. For the balance sheet, we differentiate between cash and noncash assets to identify the cash effects of transactions. Likewise, equity is separated into the contributed and earned capital components (the latter includes retained earnings as its major element). Finally, income statement effects are separated into revenues, expenses, and net income (the updating of retained earnings is denoted with an arrow line running from net income to earned capital). This template provides a convenient means to represent financial accounting transactions and events in a simple, concise manner for assessing their effects on financial statements.


Business Insights

Students appreciate and become more engaged when they can see the real-world relevance of what they are learning in the classroom. We have included a generous number of current, real-world examples throughout each chapter in Business Insight boxes. The following is a representative example:

Decision Making Orientation

One primary goal of a financial accounting course is to teach students the skills needed to apply their accounting knowledge to solving real business problems. With that goal in mind, You Make the Call boxes in each chapter encourage students to apply the material presented to solving actual business scenarios.

Mid-Chapter and Chapter-End Reviews

Financial accounting can be challenging—especially for students lacking business experience or previous exposure to business courses. To reinforce concepts presented in each chapter and to ensure student comprehension, we include mid-chapter and chapter-end reviews that require students to recall and apply the financial accounting techniques and concepts described in each chapter.

Research Insights for Business Students

Academic resresearch plays an important role in the way business is conducted, accounting is performed, and students are taught. It is important for students to recognise how modern research and modern business practice interact. Therefore, we periodically incorporate relevant research to help students understand the important relation between research and modern business.


Many instructors have approached us to ask about suggested chapter coverage based on courses of varying length. To that end, we provide the following table of possible course designs:


  • The authors have added a brief introduction to Data Analytics in Chapter 1 and Appendix B (Online), which provides a more in-depth exploration of Data Analytics.
  • Updated Standards:  As As appropriate, the text and assignments have been updated to reflect the latest
    IASB standards:
    • The new Revenue Recognition standard is reflected in Chapter 4 and throughout the book where appropriate
    • Chapter 8 reflects the new Lease standard
    • Chapter 10 reflects the new Financial Investments standard
  • Canada Goose Holdings, Inc. (Canada) replaced Indigo Books & Music Inc. (Canada) as the focus company of Chapters 2 and 3.
  • Inditex S.A. (Spain) replaced Thomson Reuters (Canada) as the focus company of Chapter 9.
  • SoftBank Group Corporation (Japan) replaced SMRT Corporation Ltd. (Singapore), which was acquired by the Singapore government in 2016, as the focus company of Chapter 10.
  • In addition to the chapter-specific changes, there have been several changes that span the entire book.
    Some of these global changes include:
    • Updated numbers for examples, illustrations, and assignments that use real data
    • Updated footnotes and other nonfinancial disclosures
    • Updated excerpts from the business and popular press
    • Numerous assignments in each chapter have been revised or replaced with new assignments


Fundamentals of Financial Accounting Tutorial

This interactive tutorial is intended for use in programs that either require or would like to offer a pre-term tutorial that creates a baseline of accounting knowledge for students with little to no prior exposure to financial accounting. Initially developed as a pre-term tutorial for first year MBA students, this product can be used as a warm-up for any introductory level financial accounting course. It is designed as an asynchronous, interactive, self-paced experience for students.

Available Learning Modules (You Select)

  1. Introducing Financial Accounting (approximate completion time 2 hours)
  2. Constructing Financial Statements (approximate completion time 4 hours)
  3. Adjusting Entries and Completing the Accounting Cycle (approximate completion time 4 hours)
  4. Reporting and Analysing Cash Flows (approximate completion time 3.5 hours)
  5. Analysing and Interpreting Financial Statements (approximate completion time 3.5 hours)

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For Instructors

  • Solutions Manual: Created by the authors, the Solutions Manual contains complete solutions to all the assignment material in the text.
  • Test Bank: The test bank includes multiple-choice choice items, matching questions, short-essay questions, and problems.
  • PowerPoint: The PowerPoint slides outline key elements of each chapter.
  • Website: All instructor materials are accessible via the book’s website (password-protected) along with other useful links and marketing information. 
Expand/Collapse All
About the Authors (pg. iii)
Preface (pg. v)
Brief Contents (pg. xii)
Contents (pg. xiii)
Chapter 1: Introducing Financial Accounting (pg. 3)
Roche (pg. 3)
Demand for Accounting Information (pg. 4)
Who Uses Financial Accounting Information? (pg. 5)
Costs and Benefits of Disclosure (pg. 6)
Business Activities (pg. 7)
Planning Activities (pg. 8)
Investing Activities (pg. 8)
Financing Activities (pg. 9)
Operating Activities (pg. 10)
Financial Statements (pg. 11)
Balance Sheet (pg. 11)
Income Statement (pg. 12)
Statement of Changes in Equity (pg. 13)
Statement of Cash Flows (pg. 14)
Financial Statement Linkages (pg. 14)
Information Beyond Financial Statements (pg. 15)
Mid-Chapter Review (pg. 16)
Financial Reporting Environment (pg. 16)
Generally Accepted Accounting Principles/Practice (pg. 16)
International Financial Reporting Standards (pg. 17)
Roles of Regulator, Management, and Auditor (pg. 18)
Analysing Financial Statements (pg. 19)
Profitability Analysis (pg. 20)
Analysis Objective (pg. 20)
Credit Risk Analysis (pg. 21)
Analysis Objective (pg. 21)
Technology and Accounting (pg. 22)
Organisation of the Book (pg. 23)
Chapter-End Review (pg. 23)
Appendix 1A: Conceptual Framework for Financial Reporting (pg. 24)
The Objective of General Purpose Financial Reporting (pg. 24)
Qualitative Characteristics of Useful Financial Information (pg. 24)
Underlying Assumptions and Features (pg. 25)
Summary (pg. 26)
Guidance Answers . . . You Make the Call (pg. 27)
Key Ratios (pg. 28)
Key Terms (pg. 28)
Multiple Choice (pg. 28)
Discussion Questions (pg. 29)
Mini Exercises (pg. 29)
Exercises (pg. 30)
Problems (pg. 31)
Cases and Projects (pg. 34)
Solutions to Review Problems (pg. 35)
Chapter 2: Constructing Financial Statements (pg. 39)
Canada Goose (pg. 38)
Reporting Financial Condition (pg. 40)
Assets (pg. 40)
Liabilities and Equity (pg. 43)
Mid-Chapter Review 1 (pg. 45)
Analysing and Recording Transactions for the Balance Sheet (pg. 45)
Mid-Chapter Review 2 (pg. 49)
Reporting Financial Performance (pg. 49)
Accrual Accounting for Revenues and Expenses (pg. 50)
Retained Earnings (pg. 52)
Analysing and Recording Transactions for the Income Statement (pg. 52)
Reporting on Equity (pg. 56)
Analysing and Recording Equity Transactions (pg. 56)
Statement of Changes in Equity (pg. 56)
Mid-Chapter Review 3 (pg. 57)
Journalising and Posting Transactions (pg. 57)
T-Account (pg. 58)
Debit and Credit System (pg. 58)
T-Account with Debits and Credits (pg. 59)
The Journal Entry (pg. 59)
Analyse, Journalise, and Post (pg. 60)
Analysing Financial Statements (pg. 66)
Analysis Objective (pg. 66)
Chapter-End Review (pg. 67)
Summary (pg. 68)
Guidance Answers . . . You Make the Call (pg. 69)
Key Ratios (pg. 69)
Key Terms (pg. 69)
Multiple Choice (pg. 70)
Discussion Questions (pg. 70)
Mini Exercises (pg. 71)
Exercises (pg. 75)
Problems (pg. 79)
Cases and Projects (pg. 87)
Solutions to Review Problems (pg. 87)
Chapter 3: Adjusting Accounts for Financial Statements (pg. 93)
Canada Goose (pg. 93)
Accounting Cycle (pg. 94)
Analysing and Recording Transactions (pg. 95)
Review of Accounting Procedures (pg. 95)
Adjusting the Accounts (pg. 101)
Preparing an Unadjusted Trial Balance (pg. 102)
Types of Adjustments (pg. 102)
Ethics and Adjusting Entries (pg. 108)
Mid-Chapter Review (pg. 109)
Constructing Financial Statements from Adjusted Accounts (pg. 110)
Preparing an Adjusted Trial Balance (pg. 110)
Preparing Financial Statements (pg. 110)
Closing Temporary Accounts (pg. 114)
Closing Process (pg. 115)
Closing Steps Illustrated (pg. 115)
Preparing a Post-Closing Trial Balance (pg. 116)
Summarising the Accounting Cycle (pg. 117)
Financial Statement Analysis (pg. 117)
Using Information on Levels and Flows (pg. 117)
Chapter-End Review (pg. 118)
Summary (pg. 119)
Guidance Answers . . . You Make the Call (pg. 120)
Key Terms (pg. 120)
Multiple Choice (pg. 120)
Discussion Questions (pg. 121)
Mini Exercises (pg. 122)
Exercises (pg. 124)
Problems (pg. 127)
Cases and Projects (pg. 136)
Solutions to Review Problems (pg. 138)
Chapter 4: Reporting and Analysing Revenues and Receivables (pg. 147)
TomTom (pg. 147)
Reporting Operating Income (pg. 148)
Revenue Recognition (pg. 150)
Mid-Chapter Review 1 (pg. 156)
Mid-Chapter Review 2 (pg. 161)
Reporting Accounts Receivable (pg. 161)
Determining the Allowance for Uncollectible Accounts (pg. 162)
Reporting the Allowance for Uncollectible Accounts (pg. 163)
Recording Write-offs of Uncollectible Accounts (pg. 164)
Footnote Disclosures and Interpretations (pg. 165)
Mid-Chapter Review 3 (pg. 168)
Analysing Financial Statements (pg. 168)
Analysis Objective (pg. 168)
Earnings Management (pg. 170)
Chapter-End Review (pg. 171)
Appendix 4A: Reporting Nonrecurring Items (pg. 172)
Discontinued Operations (pg. 172)
Restructuring Costs (pg. 172)
Appendix 4A Review (pg. 173)
Summary (pg. 174)
Guidance Answers . . . You Make the Call (pg. 175)
Key Ratios (pg. 175)
Key Terms (pg. 175)
Multiple Choice (pg. 176)
Discussion Questions (pg. 176)
Mini Exercises (pg. 177)
Exercises (pg. 180)
Problems (pg. 186)
Cases and Projects (pg. 189)
Solutions to Review Problems (pg. 193)
Chapter 5: Reporting and Analysing Inventory (pg. 197)
VTech (pg. 197)
Reporting Operating Expenses (pg. 198)
Expense Recognition Principles (pg. 198)
Reporting Inventory Costs in the Financial Statements (pg. 199)
Recording Inventory Costs in the Financial Statements (pg. 200)
Inventory and the Cost of Acquisition (pg. 201)
Inventory Reporting by Manufacturing Firms (pg. 201)
Mid-Chapter Review 1 (pg. 203)
Inventory Costing Methods (pg. 203)
First-In, First-Out (FIFO) (pg. 205)
Average Cost (AC) (pg. 206)
Lower of Cost or Market (pg. 207)
Mid-Chapter Review 2 (pg. 208)
Financial Statement Disclosure (pg. 209)
Analysing Financial Statements (pg. 211)
Analysis Objective (pg. 211)
Analysis Objective (pg. 212)
Chapter-End Review (pg. 215)
Appendix 5A: LIFO (pg. 215)
Last-In, First-Out (LIFO) (pg. 215)
Using LIFO Reserve to Convert LIFO to FIFO (pg. 216)
Appendix-End Review (pg. 217)
Summary (pg. 217)
Guidance Answers . . . You Make the Call (pg. 218)
Key Ratios (pg. 219)
Key Terms (pg. 219)
Multiple Choice (pg. 219)
Discussion Questions (pg. 220)
Mini Exercises (pg. 220)
Exercises (pg. 223)
Problems (pg. 225)
Cases and Projects (pg. 228)
Solutions to Review Problems (pg. 230)
Chapter 6: Reporting and Analysing Long-Term Operating Assets (pg. 235)
Airbus (pg. 235)
Introduction (pg. 236)
Property, Plant, and Equipment (PPE) (pg. 236)
Determining Costs to Capitalise (pg. 237)
Depreciation (pg. 238)
Depreciation Methods (pg. 239)
Changes in Accounting Estimates (pg. 242)
Asset Sales and Impairments (pg. 243)
Revaluation Model (pg. 245)
Footnote Disclosure (pg. 246)
Analysing Financial Statements (pg. 247)
Analysis Objective (pg. 247)
Analysis Objective (pg. 248)
Mid-Chapter Review (pg. 250)
Intangible Assets (pg. 250)
Research and Development Costs (pg. 251)
Patents (pg. 251)
Copyrights (pg. 251)
Trademarks (pg. 252)
Franchise Rights (pg. 252)
Amortisation and Impairment of Identifiable Intangible Assets (pg. 252)
Goodwill (pg. 254)
Footnote Disclosures (pg. 255)
Analysis Implications (pg. 257)
Chapter-End Review (pg. 257)
Summary (pg. 258)
Guidance Answers . . . You Make the Call (pg. 258)
Key Terms (pg. 259)
Multiple Choice (pg. 259)
Discussion Questions (pg. 259)
Mini Exercises (pg. 260)
Exercises (pg. 262)
Problems (pg. 265)
Cases and Projects (pg. 268)
Solutions to Review Problems (pg. 269)
Chapter 7: Reporting and Analysing Liabilities (pg. 275)
Samsung Electronics (pg. 275)
Introduction (pg. 276)
Current Liabilities (pg. 276)
Accounts or Trade Payable (pg. 278)
Mid-Chapter Review 1 (pg. 280)
Accrued Liabilities (pg. 280)
Mid-Chapter Review 2 (pg. 284)
Current Nonoperating (Financial) Liabilities (pg. 284)
Mid-Chapter Review 3 (pg. 286)
Long-Term Liabilities (pg. 286)
Instalment Loans (pg. 286)
Bonds (pg. 288)
Pricing of Bonds (pg. 289)
Effective Cost of Debt (pg. 291)
Reporting of Bond Financing (pg. 292)
Effects of Discount and Premium Amortisation (pg. 294)
The Fair Value Option (pg. 296)
Effects of Bond Repurchase (pg. 297)
Financial Statement Footnotes (pg. 297)
Interest and the Cash Flows Statement (pg. 299)
Analysing Financial Statements (pg. 299)
Analysis Objective (pg. 299)
Debt Ratings and the Cost of Debt (pg. 301)
Chapter-End Review (pg. 303)
Summary (pg. 303)
Guidance Answers . . . You Make the Call (pg. 304)
Key Ratios (pg. 304)
Key Terms (pg. 304)
Multiple Choice (pg. 305)
Discussion Questions (pg. 305)
Mini Exercises (pg. 306)
Exercises (pg. 310)
Problems (pg. 313)
Cases and Projects (pg. 316)
Solutions to Review Problems (pg. 318)
Chapter 8: Reporting and Analysing Leases, Pensions, and Income Taxes (pg. 321)
Unilever (pg. 321)
Introduction (pg. 322)
Leases (pg. 324)
Lessee Reporting of Leases (pg. 324)
Footnote Disclosures of Leases (pg. 327)
Mid-Chapter Review 1 (pg. 330)
Pensions (pg. 330)
Balance Sheet Effects of Defined Benefit Pension Plans (pg. 331)
Income Statement Effects of Defined Benefit Pension Plans (pg. 332)
Footnote Disclosures-Components of Plan Assets and PBO (pg. 333)
Footnote Disclosures-Components of Pension Expense (pg. 335)
Footnote Disclosures and Future Cash Flows (pg. 338)
Other Post-Employment Benefits (pg. 339)
Mid-Chapter Review 2 (pg. 340)
Accounting For Income Taxes (pg. 341)
Book-Tax Differences (pg. 341)
Income Tax Disclosures (pg. 345)
Deferred Taxes in the Cash Flow Statement (pg. 347)
Computation and Analysis of Taxes (pg. 347)
Mid-Chapter Review 3 (pg. 348)
Analysing Financial Statements (pg. 348)
Analysis Objective (pg. 348)
Summary (pg. 349)
Guidance Answers . . . You Make The Call (pg. 350)
Key Ratios (pg. 350)
Key Terms (pg. 351)
Multiple Choice (pg. 351)
Discussion Questions (pg. 351)
Mini Exercises (pg. 352)
Exercises (pg. 354)
Problems (pg. 358)
Cases and Projects (pg. 361)
Solutions to Review Problems (pg. 366)
Chapter 9: Reporting and Analysing Shareholders’ Equity (pg. 369)
Inditex, S.A. (pg. 369)
Introduction (pg. 370)
Contributed Capital (pg. 371)
Classes of Shares (pg. 371)
Accounting for Share Transactions (pg. 373)
Mid-Chapter Review 1 (pg. 377)
Earned Capital (pg. 378)
Cash Dividends (pg. 378)
Mid-Chapter Review 2 (pg. 380)
Share Dividends and Splits (pg. 380)
Share Transactions and the Cash Flows Statement (pg. 382)
Mid-Chapter Review 3 (pg. 382)
Comprehensive Income (pg. 382)
Summary of Equity (pg. 383)
Analysing Financial Statements (pg. 384)
Analysis Objective (pg. 384)
Mid-Chapter Review 4 (pg. 386)
Earnings Per Share (pg. 386)
Computation and Analysis of EPS (pg. 387)
Chapter-End Review (pg. 389)
Appendix 9A: Dilutive Securities: Further Considerations (pg. 389)
Convertible Securities (pg. 389)
Share Rights (pg. 391)
Share Options (pg. 392)
Appendix 9A Review (pg. 393)
Summary (pg. 394)
Guidance Answers . . . You Make the Call (pg. 395)
Key Ratios (pg. 395)
Key Terms (pg. 395)
Multiple Choice (pg. 395)
Discussion Questions (pg. 396)
Mini Exercises (pg. 397)
Exercises (pg. 401)
Problems (pg. 407)
Cases and Projects (pg. 410)
Solutions to Review Problems (pg. 413)
Chapter 10: Reporting and Analysing Financial Investments (pg. 419)
SoftBank Group (pg. 419)
Introduction (pg. 420)
Fair Value: An Introduction (pg. 422)
Passive Investments (pg. 422)
Acquisition and Sale (pg. 423)
Investments Marked to Fair Value (pg. 424)
Investments Reported at Cost (pg. 427)
Financial Statement Disclosures (pg. 428)
Potential for Earnings Management (pg. 431)
Mid-Chapter Review 1 (pg. 431)
Investments with Significant Influence (pg. 431)
Accounting for Investments with Significant Influence (pg. 432)
Financial Statement Disclosures (pg. 434)
Mid-Chapter Review 2 (pg. 437)
Investments with Control (pg. 437)
Accounting for Investments with Control (pg. 437)
Noncontrolling Interest (pg. 440)
Reporting of Acquired Assets and Liabilities (pg. 442)
Financial Statement Analysis (pg. 447)
Chapter-End Review (pg. 448)
Appendix 10A: Equity Method Mechanics (pg. 448)
Appendix 10B: Consolidation Accounting Mechanics (pg. 449)
Appendix 10C: Accounting for Investments in Derivatives (pg. 451)
Summary (pg. 452)
Guidance Answers . . . You Make the Call (pg. 454)
Key Terms (pg. 454)
Multiple Choice (pg. 455)
Discussion Questions (pg. 455)
Mini Exercises (pg. 456)
Exercises (pg. 458)
Problems (pg. 467)
Cases and Projects (pg. 471)
Solutions to Review Problems (pg. 474)
Chapter 11: Reporting and Analysing Cash Flows (pg. 481)
Qantas (pg. 481)
Purpose of the Statement of Cash Flows (pg. 482)
What Do We Mean by “CASH”? (pg. 482)
What Does a Statement of Cash Flows Look Like? (pg. 483)
Framework for the Statement of Cash Flows (pg. 484)
Operating Activities (pg. 484)
Investing Activities (pg. 484)
Financing Activities (pg. 485)
Usefulness of Classifications (pg. 485)
Mid-Chapter Review 1 (pg. 486)
Preparing the Statement of Cash Flows-Operating Activities (pg. 487)
Converting Revenues and Expenses to Cash Flows from Operating Activities (pg. 488)
Mid-Chapter Review 2 (pg. 495)
Reconciling Net Income and Cash Flow from Operating Activities (pg. 496)
Cash Flow from Operating Activities Using the Indirect Method (pg. 497)
Mid-Chapter Review 3 (pg. 498)
Preparing the Statement of Cash Flows-Investing and Financing Activities (pg. 498)
Cash Flows from Investing Activities (pg. 499)
Cash Flows from Financing Activities (pg. 499)
Mid-Chapter Review 4 (pg. 501)
Additional Detail in the Statement of Cash Flows (pg. 501)
Gains and Losses on Investing and Financing Activities (pg. 503)
Noncash Investing and Financing Activities (pg. 504)
Mid-Chapter Review 5 (pg. 505)
The Effects of Foreign Currencies on the Cash Flow Statement (pg. 506)
Supplemental Disclosures (pg. 506)
Analysing Financial Statements (pg. 507)
Interpreting Indirect Method Cash from Operations (pg. 507)
Analysis Objective (pg. 507)
Analysis Objective (pg. 508)
Chapter-End Review (pg. 510)
Appendix 11A: A Spreadsheet Approach to Preparing the Statement of Cash Flows (pg. 510)
Appendix-End Review (pg. 513)
Summary (pg. 513)
Guidance Answers . . . You Make The Call (pg. 514)
Key Ratios (pg. 515)
Key Terms (pg. 515)
Multiple Choice (pg. 515)
Discussion Questions (pg. 516)
Mini Exercises (pg. 517)
Exercises (pg. 520)
Problems (pg. 525)
Cases and Projects (pg. 534)
Solutions to Review Problems (pg. 538)
Chapter 12: Analysing and Interpreting Financial Statements (pg. 543)
Vodafone Group Plc (pg. 543)
Introduction (pg. 544)
Assessing the Business Environment (pg. 544)
Vertical and Horizontal Analysis (pg. 545)
Mid-Chapter Review 1 (pg. 548)
Return on Investment (pg. 550)
Return on Equity (ROE) (pg. 550)
Return on Assets (ROA) (pg. 551)
Return on Financial Leverage (ROFL) (pg. 552)
Mid-Chapter Review 2 (pg. 553)
Disaggregating ROA (pg. 553)
Mid-Chapter Review 3 (pg. 558)
Liquidity and Solvency (pg. 558)
Liquidity Analysis (pg. 560)
Solvency Analysis (pg. 562)
Limitations of Ratio Analysis (pg. 564)
Chapter-End Review (pg. 565)
Appendix 12A: Analysing and Interpreting Core Operating Activities (pg. 565)
Appendix-End Review A (pg. 568)
Appendix 12B: Pro Forma Financial Statements (pg. 569)
Appendix-End Review B (pg. 574)
Appendix 12C: Measuring Return on Financial Leverage (pg. 574)
Appendix-End Review C (pg. 575)
Summary (pg. 575)
Key Ratios (pg. 576)
Key Terms (pg. 577)
Multiple Choice (pg. 577)
Guidance Answers . . . You Make the Call (pg. 578)
Discussion Questions (pg. 578)
Mini Exercises (pg. 578)
Exercises (pg. 582)
Problems (pg. 586)
Cases and Projects (pg. 595)
Solutions to Review Problems (pg. 596)
Appendix A: Compound Interest and the TimeValue of Money (pg. 602)
Future Value Concepts (pg. 602)
Present Value Concepts (pg. 604)
Using Excel to Compute Time Value (pg. 607)
Key Terms (pg. 617)
Exercises (pg. 618)
Appendix B: Data Analytics and Blockchain Technology (pg. 623)
Data Analytics (pg. 624)
Big Data (pg. 624)
Types of Data Analytics (pg. 624)
Data Analytics in the Accounting Profession (pg. 625)
The Analytics Mindset (pg. 626)
Data Analytic Tools (pg. 627)
Data Visualization (pg. 628)
Blockchain Technology (pg. 632)
Summary (pg. 634)
Video Resources For Tableau (pg. 635)
Multiple Choice (pg. 635)
Exercises (pg. 636)
Problems (pg. 637)
Index (pg. 648)
M.H. Franco Wong

M.H. Franco Wong

M.H. Franco Wong is CPA Ontario Professor of Financial Accounting at the Rotman School of Management at the University of Toronto.

He earned his Ph.D. degree in accounting from the Wharton School of the University of Pennsylvania and his B.A. and M.A. in economics from the University of Lethbridge and Simon Fraser University, respectively. Professor Wong has also taught at the University of California at Berkeley’s Haas School of Business, University of Chicago’s Graduate School of Business (now Booth), and INSEAD. During the 2013–2014 academic year, he was president of the Chinese Accounting Professors’ Association of North America.

Professor Wong’s research focuses on the production and dissemination of accounting information and the use of accounting information for valuation and contracting purposes. He has examined financial reporting issues about derivatives financial instruments, internet companies, employee stock options, share repurchases, earnings management, real investment effects of accounting, and equity research analysts. His research has appeared in leading academic journals, including Journal of Accounting and Economics, Journal of Accounting Research, Review of Accounting Studies, and The Accounting Review. Professor Wong has given over 100 presentations at numerous business schools and conferences around the world. Between 2007 and 2013, he co-organised eight academic conferences in Canada, China, and France.

Professor Wong has taught financial accounting and financial statement analysis to undergraduate and MBA students. He has received several awards for teaching excellence at the Haas School of Business and Rotman School of Management.

Michelle L. Hanlon

Michelle L. Hanlon

Michelle L. Hanlon is the Howard W. Johnson Professor at the MIT Sloan School of Management. She earned her doctorate at the University of Washington.

Prior to joining MIT, she was a faculty member at the University of Michigan. Professor Hanlon has taught financial accounting to undergraduates, MBA students, executive MBA students, and Masters of Finance students. Professor Hanlon also teaches Taxes and Business Strategy to MBA students. She is the winner of the 2013 Jamieson Prize for Excellence in Teaching at MIT Sloan.

Professor Hanlon’s research focuses primarily on the intersection of taxation and financial accounting. Her recent work examines the capital market effects of the accounting for income tax, the reputational effects of corporate tax avoidance, and the economic consequences of U.S. international tax policies for multinational corporations. She has published research studies in the Journal of Accounting and Economics, the Journal of Accounting Research, The Accounting Review, the Review of Accounting Studies, the Journal of Finance, the Journal of Financial Economics, the Journal of Public Economics, and others. She has won several awards for her research and has presented her work at numerous universities and conferences. Professor Hanlon has served on several editorial boards and currently serves as an editor at the Journal of Accounting and Economics. 

Professor Hanlon has testified in front of the U.S. Senate Committee on Finance and the U.S. House of Representatives Committee on Ways and Means about the interaction of financial accounting and tax policy. She served as a U.S. delegate to the American-Swiss Young Leaders Conference in 2010 and worked as an Academic Fellow at the U.S. House Ways and Means Committee in 2015.

Robert P. Magee

Robert P. Magee

Robert P. Magee is Keith I. DeLashmutt Professor of Accounting Information and Management at the Kellogg School of Management at Northwestern University.

He received his A.B., M.S. and Ph.D. from Cornell University. Prior to joining the Kellogg faculty in 1976, he was a faculty member at the University of Chicago's Graduate School of Business. For academic year 1980-81, he was a visiting faculty member at IMEDE (now IMD) in Lausanne, Switzerland.

Professor Magee's research focuses on the use of accounting information to facilitate decision-making and control within organizations. He has published articles in The Accounting Review, the Journal of Accounting Research, the Journal of Accounting and Economics, and a variety of other journals. He is the author of Advanced Managerial Accounting and co-author (with Thomas R. Dyckman and David H. Downes) of Efficient Capital Markets and Accounting: A Critical Analysis. The latter book received the Notable Contribution to the Accounting Literature Award from the AICPA in 1978. Professor Magee has served on the editorial boards of The Accounting Review, the Journal of Accounting Research, the Journal of Accounting and Economics and the Journal of Accounting, Auditing and Finance. From 1994-96, he served as Editor of The Accounting Review, the quarterly research journal of the American Accounting Association. He received the American Accounting Association's Outstanding Accounting Educator Award in 1999 and the Illinois CPA Society Outstanding Educator Award in 2000.

Professor Magee teaches financial accounting to MBA and Executive MBA students. He has received several teaching awards at the Kellogg School, including the Alumni Choice Outstanding Professor Award in 2003.

Glenn M. Pfeiffer

Glenn M. Pfeiffer

Glenn M. Pfeiffer is Professor of Accounting at the George L. Argyros School of Business and Economics at Chapman University.

He received his M.S. and Ph.D. from Cornell University after he earned a bachelor's degree from Hope College. Prior to joining the faculty at the Argyros School, he held appointments at the University of Washington, Cornell University, the University of Chicago, the University of Arizona, and San Diego State University.

Professor Pfeiffer’s research focuses on financial reporting and capital markets. He has investigated issues relating to lease accounting, LIFO inventory liquidation, earnings per share, employee stock options, corporate reorganization, and technology investments. He has published articles in The Accounting Review, the Financial Analysts Journal, the International Journal of Accounting Information Systems, the Journal of Applied Business Research, the Journal of High Technology Management Research, the Journal of Accounting Education, and several other academic journals. In addition, he has published numerous case studies in financial accounting and reporting.

Professor Pfeiffer teaches financial accounting and financial analysis to undergraduate, MBA, and Executive students. He has also taught managerial accounting for MBAs. He has won several teaching awards at both the undergraduate and graduate levels.

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