Intermediate Accounting, 2e

PUBLISHING FEBRUARY 2019

by Hanlon, Hodder, Nelson, Roulstone, Dragoo

| ISBN: Volume 1: 978-1-61853-313-5 Volume 2: 978-1-61853-335-7 | Copyright 2020

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Welcome to the Second Edition of Intermediate Accounting

This text is uniquely designed within a system of interactive resources that are tailored to the needs of today's students. As the learning styles of students have evolved, we do not feel that the market has fully embraced the study habits of today’s students and the power of technology in the learning process. The emphasis in our approach is to provide students with a demo and a review problem on each deliberately selected, key learning objective. In this way, students practice each learning objective with the added opportunity to practice the exact demos electronically in myBusinessCourse, our online homework platform. Our approach steers away from dense text (which the average student is not reading) and moves to an active-learning approach where content is delivered in short bursts followed by immediate practice. Because each learning outcome for every chapter is self-contained, faculty have the option to pick and choose learning objectives allowing complete flexibility.
Integral to this active-learning approach are the resources provided to students allowing them to be successful in mastering the demo problems. We noted the need in the market for a direct incorporation of authoritative support. Although some references may be included in a footnote to a chapter in the current market, direct citations are rarely seen. In our approach, we provide succinct yet thorough, to-the-point explanations in each self-contained learning objective along with direct citations of the most relevant references from the Codification. We feel this best prepares the typical intermediate accounting student who will often reference and cite the authoritative standards in practice. This novel approach of combining an active-learning approach supplemented with real life authoritative guidance reflects our combined experiences in preparing intermediate accounting students for life in practice.

Target Audience

Intermediate Accounting is usually a 2-course sequence, but some schools offer it as a 3-course sequence (especially at quarter schools). Is it the next set of financial accounting courses after introductory financial accounting at the graduate level, and it is taken by future accountants and finance majors. This Intermediate sequence conveys much of the technical accounting knowledge that students need to pass the CPA exam.
Product Strategy

A wide range of market research indicates that students don’t use/read textbooks the way they once did. Today’s students are much more likely to attempt their homework before reading anything in the textbook. It is only after attempting the homework, reviewing their notes, and watching videos that students read the printed textbook. When they do read the textbook, they often skim the content to identify the section that they need to complete their assignments. Kieso, Spiceland, and the other existing intermediate products do not recognize this change in study habits.
Hanlon et al has been streamlined to briefly present the theory (with citations to the Codification) and then teach students how to apply the theory to specific situations through demonstrations problems, which include a video walk-through. The students then have to attempt a similar assignment on their own through the Review problem. Also unique is that all learning resources (concepts, demos, reviews) are organized into separate modules identified with their own learning objective (LO), making it easy and efficient for students to navigate by learning objective. Again, research tells us that this is how students learn accounting in today's world.


Overview, Demo, and Review 

We have adopted a straightforward effective layout throughout every chapter of the book. We have included carefully crafted learning objectives that are not extraneous or all-encompassing. Each key learning objective is clearly identified with a distinct red banner and is followed by its own overview, demo, and review problem.

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In fact, each learning objective represents a separate learning module, allowing students and faculty to break down complex topics into manageable subtopics. We believe that students will appreciate this style of learning uniquely adopted in Intermediate Accounting because of the current trend in learning preferences. Students prefer to learn by doing with convenient access explanations and authoritative references for help in the process. For additional support, students have access to short videos for each demo.

Action Plan 

Each chapter opens with a grid that identifies the learning objectives for the chapter, the related pages, demonstrations, review applications, and assignments. Students and faculty can quickly jump to the item they need.

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Overview--Authoritative Foundation

Following each learning objective is a brief explanation of the topic with visual references (diagrams), when helpful. We also include an overview box for each learning objective to provide students with a quick overview of key topics. For topics that we felt relevant authoritative guidance was important, we included an excerpt from the accounting guidance. This presentation of the accounting guidance minimizes authors’ biases and places both students and faculty in a unique authoritative position. Our approach incorporates ASC Glossary definitions whenever possible and terminology that is common in the Codification such as the terms recognition, measurement, derecognition, and disclosure. References to authoritative guidance are distinctly highlighted with black block text as shown below.

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Demonstrations

We believe that a presentation focused on demos will inspire the contemporary college learner. Demos are included for each learning objective to illustrate the accounting concept discussed. The blue text, color-coded solutions are provided as this is the student’s first exposure to the relevant topic. We noted that in the market, it is not uncommon for an accounting concept or a variation to an accounting method to be explained in a paragraph or in a two-page (or more) spread instead of through an illustration. This is how our approach is very different—accounting concepts are predominantly demonstrated. The active learner can reconstruct the steps independently or attempt the same demo through the electronic system—myBusinessCourse. Alongside the journal entries in the margins, we also include the impact on the accounting equation and T-accounts to aid in student comprehension. Research tells us that active learning, where the student is involved in the learning process, results in considerable advantages in retention. In addition, each demo is accompanied by a short video clip (typically 3 minutes or less) that walks students through the solution to the demo. This approach, along with the supporting resources, are invaluable in any course, but especially in an online course where students are largely working through these complex topics independently.

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Reviews

At the conclusion of each learning objective, a review problem is provided with answers included at the end of the chapter. These review problems are presented to reinforce concepts presented in the section and to ensure student comprehension. By not providing the review solutions on the same page as the review, we are encouraging students to ‘learn by doing.’ The demo, along with the overview material, provides the foundation for students to complete the review problems. Again, students have the opportunity to practice the same problem electronically in myBusinessCourse. We believe that many students will take advantage of the opportunity to work through the problem electronically because they will gain instant feedback as to whether they completed the solution accurately—and frankly, an electronic environment is more in line with how we all function every day. In addition, each review is accompanied by a short video clip (typically 3 minutes or less) that walks students through the solution to the review.

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Learning in Context

Expanding Your Knowledge

This section expands on related topics of the section through examples and discussions going beyond the section’s learning objective. These topics can enhance classroom discussions or simply allow the curious student to expand to topics beyond the usual coverage. A representative sample follows.

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Excerpts from Real Financial Statements and Notes

Excerpts from actual financial statements and footnotes are incorporated throughout the text to illustrate how real companies perform the accounting.

Real World

Students appreciate and become more engaged when they can see the real-world relevance of the content they are learning in class. We included current, real-world examples of financial reporting throughout each chapter in Real World boxes.

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Chapter Assessment

The challenge in intermediate accounting is applying the concepts to different scenarios. Our end of chapter materials consist of a wide variety of formats, varying levels of complexity, a thorough coverage of learning objectives, and selections with real world data. The materials increase in complexity as you move through the different types of formats: questions, brief exercises, exercises, and problems. The questions in each end of chapter section are numbered sequentially from start to finish to avoid confusion for students. All learning objectives are represented in the end of chapter materials. Each chapter contains approximately 20 questions, 25 brief exercises, 30 exercises, and 15 problems. We prepared a grid plotting each chapter’s content across the best competing texts in the marketplace, arranged by learning objective, to ensure that our coverage meets or exceeds the competition. Importantly, the end of chapter material corresponds with the listed learning objective in that students have the necessary foundational material to complete the corresponding problems.

The last section (Accounting Decisions and Judgments) includes more application-type problems, which are identified as follows:

  • Real World Analysis: Includes real-world material from actual publicly available financial statements.  
  • Communication Case: Allows students to apply chapter content through a written presentation.
  • Judgment Case: Pushes students to levels of evaluation and analysis involving relevant content.
  • Ethics CaseShows students how decisions have ethical consequences.
  • Codification SkillsIncludes research in the ASC glossary and generally in the Codification on specific topics and through an applied example.
  • Challenge ProblemsProblems either integrate content from multiple chapters or require students to apply the chapter’s content in a more complex environment that pushes students beyond the usual content coverage.
  • Deloitte Trueblood CasesReferences are provided to cases in the Trueblood case series, prepared by Deloitte professionals, based on recent accounting technical issues that require research and judgment.

IFRS Appendix

We provide a separate section summarizing key differences between U.S. GAAP and IFRS, arranged in the same order as the chapter coverage. The presentation of the IFRS section consistently follows our approach of overview, demo, and review. Including the coverage in a separate section provides faculty with the most flexibility in determining how, when, or whether to introduce specific aspects of IFRS.

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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. Instructional videos for each Demonstration Problem and Review exercise are incorporated. 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.

Chapters are organized into two parts.

Part 1: Chapters 1 through 6 offer a review of introductory financial accounting. We begin with the accounting environment and the underlying conceptual framework. We review the accounting double-entry system, including the preparation and presentation of the four financial statements: Income statement (including comprehensive income), Balance sheet, Statement of equity, and Statement of cash flows. We also show the DuPont framework, which is useful for the analysis and interpretation of accounting reports. The first part of the book concludes with a review of the time value of money.

Part 2: The second part launches with the chapter on revenue recognition. This chapter is crucial to understanding nearly all the remaining chapters, including when revenue (and assets) are recognized, and when expenses (and liabilities) are recognized. Chapters 8 through 22 loosely follow the accounting equation. Specifically, we begin with the chapters covering assets—Chapters 8 through 14, followed by chapters covering liabilities (or both liabilities and assets)—Chapters 15 through 21. We conclude part 2 by revisiting the statement of cash flows (from Chapter 5), which addresses the cash flows related to some special topics introduced in part 2. Finally, Appendix A covers the reporting for accounting changes and error analysis, and Appendix B describes key areas of differences between U.S. GAAP and IFRS.

Selected highlights for each chapter are summarized as follows.

Chapter One—Accounting Environment and the Conceptual Framework

• Concise presentation with direct citations to the Statements of Financial Accounting Concepts (SFACs) allowing students and faculty the opportunity to interpret the guidance directly.

Chapter Two—Accounting Information System

• Visual references to the accounting steps provide clarity throughout the chapter.

Chapter Three—Income Statement and Comprehensive Income

• Includes an introduction to the topics noncontrolling interest and foreign currency translation

• Upfront overview of accounting changes, errors, and estimates with a reference to specific coverage throughout each content area in the book. This eliminates the need for a separate chapter on accounting changes.

Chapter Four—Balance Sheet and Financial Reporting

• Introduction to financial statement disclosures and Form 10-K components provides a base for application of concepts to real world examples.

Chapter Five—Statement of Cash Flows and Financial Analysis

• Stronger emphasis on cash flows in first half of the text, emphasizing its importance in reviewing a full set of financial statements.

• Ratios introduced within the DuPont framework providing a structure to relate ratios to each other. Also distinguishes investment analysis from creditor analysis.

• Includes an introduction to proforma analysis.

• Summary grid of ratios with references to coverage throughout the text.

Chapter Six—Time Value of Money

• Time value of money calculations (in this chapter and throughout text) are illustrated in Excel, consistent with the new tools provided in the CPA exam and tools most relevant in practice.

• Includes clear applications to leases, pensions, bonds, and debt, as introductions to later chapters.

Chapter Seven—Revenue Recognition

• Learning objectives centered around the five steps in the revenue recognition process with demos and reviews concentrated on each separate step. Relevant, real-life examples provided in the demos for each step.

• Includes an overview of long-term construction contracts within the chapter. Appendix on long-term construction contracts is only necessary if faculty prefer to incorporate entries specific to the construction industry.

Chapter Eight—Cash and Receivables

• CECL model incorporated throughout the chapter.

Chapter Nine—Inventory: Measurement

• Includes a demo on periodic vs. perpetual accounting as a review of introductory material that is not always recalled by the typical intermediate student.

Chapter Ten— Inventory: Additional Issues

• Includes a robust, applied discussion of inventory principle changes and errors.

Chapter Eleven—Property, Plant & Equipment: Acquisition & Disposition

• Includes a discussion of construction in process, commonly included in PP&E presentations but missing in competing text books.

Chapter Twelve—Depreciation, Impairments, and Depletion

• Includes examples of commonly used accounting conventions for depreciation.

Chapter Thirteen—Intangible Assets

• Separately presents intangible assets as a standalone topic and not intermingled with property, plant, and equipment to decrease confusion for students and also to reflect its prominence on a balance sheet.

Chapter Fourteen—Investments and Derivatives

• Visual references to the investment categories provide clarity throughout the chapter to aid students in the navigation through multiple classification types.

• Includes a robust appendix on derivatives.

Chapter Fifteen—Short-Term Liabilities and Contingencies

• Incorporates subsequent event discussion with contingency overview.

• Includes examples of the accounting for gift card breakage.

Chapter Sixteen—Long-Term Liabilities

• Short demos followed by immediate practice especially conducive to student retention in complex topics.

Chapter Seventeen—Leases

• Includes a clear presentation of the accounting for lease incentives, including journal entries.

• Logical presentation of lease accounting with an illustration of variations in demos instead of explanations of exceptions in paragraph form.

Chapter Eighteen—Income Taxes

• Content adjusted for the recently passed U.S. tax reform act.

• Utilizes a balance sheet approach, consistent with the authoritative guidance.

Chapter Nineteen—Pensions and Postretirement Benefits

• Includes journal entries for defined contribution plans

Chapter Twenty—Stockholders’ Equity

• Demonstrations include alternative approaches of treasury stock and direct stock retirement.

Chapter Twenty-One—Share-Based Compensation and Earnings per Share

• Short demos followed by immediate practice especially conducive to student retention in complex topics

Chapter Twenty-Two—Statement of Cash Flows Revisited

• Focuses on the indirect method given the extraordinarily high usage and the overwhelming feedback that the FASB received to not require the use of the direct method.

Teaching Supplements

  • Solutions Manual: Created by the authors, the solutions manual contains complete solutions to all assignments.
  • Test Bank: Written by the authors, the test bank includes multiple choice items, matching questions, short essay questions, and problems.
  • PowerPoint: Created by the authors, the PowerPoint slides outline key elements of each chapter. 

Additional Resources

Financial Accounting Bootcamp

This interactive tutorial is intended for use in programs that either require or would like to offer a preterm tutorial that creates a baseline of accounting knowledge for students with little to no prior exposure to financial accounting. This product can be used as a refresher of topics introduced in the first financial accounting course. It is designed as an asynchronous, interactive, self-paced experience for students. Available Learning Modules (You Select) follow.

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 Analyzing Cash Flows (approximate completion time 3.5 hours)

5. Analyzing and Interpreting Financial Statements (approximate completion time 3.5 hours)

This is a separate, saleable item. Contact your sales representative to receive more information or email customerservice@cambridgepub.com.


Guide to Intermediate Accounting Research

The Guide to Intermediate Accounting Research, by Shelby Collins, is intended to serve as a supplement to the materials used in an intermediate or advanced accounting course. It includes many opportunities to apply Codification guidance to related accounting topics (including, for example, leases, investment accounting, revenue recognition, and consolidation). Students will learn to confidently address and communicate accounting research issues, from start to finish. Students will not only take away the ability to identify the accounting problem (the “researchable question”), but will gain experience locating and applying guidance within the FASB Codification. This is a separate, saleable text. Contact your sales representative to receive a desk copy or email customerservice@cambridgepub.com


Companion Casebook

Cases in Financial Reporting, 8th edition by Michael Drake (Brigham Young University), Ellen Engel (University of Illinois—Chicago), D. Eric Hirst (University of Texas – Austin), and Mary Lea McAnally (Texas A&M University). This book comprises 27 cases and is a perfect companion book for faculty interested in exposing students to a wide range of real financial statements. The cases are current and cover companies from Japan, Sweden, Austria, the Netherlands, the UK, India, as well as from the U.S. Many of the U.S. companies are major multinationals. Each case deals with a specific financial accounting topic within the context of one (or more) company’s financial statements. Each case contains financial statement information and a set of directed questions pertaining to one or two specific financial accounting issues. This is a separate, saleable casebook (ISBN 978-1-61853-122-3). Contact your sales representative to receive a desk copy or email customerservice@cambridgepub.com.

Chapter 1 Accounting Environment and the Conceptual Framework

Chapter 2 Accounting Information System

Chapter 3 Income Statement and Comprehensive Income

Chapter 4 Balance Sheet and Financial Reporting

Chapter 5 Statement of Cash Flows and Financial Analysis

Chapter 6 Time Value of Money

Chapter 7 Revenue Recognition

Chapter 8 Cash and Receivables

Chapter 9 Inventory: Measurement

Chapter 10 Inventory: Additional Issues

Chapter 11 Property, Plant, and Equipment: Acquisition and Disposition

Chapter 12 Depreciation, Impairments, and Depletion

Chapter 13 Intangible Assets

Chapter 14 Investments and Derivatives

Chapter 15 Short-Term Liabilities and Contingencies

Chapter 16 Long-Term Liabilities

Chapter 17 Leases

Chapter 18 Income Taxes

Chapter 19 Pensions and Postretirement Benefits

Chapter 20 Stockholders' Equity

Chapter 21 Share-Based Compensation and Earnings Per Share

Chapter 22 Statement of Cash Flows Revisited

Appendix A Accounting Changes and Error Analysis Revisited

Appendix B IFRS

Click on an item in the grid to preview the related video. 

Action Plan
LO Topic/Subtopic Page Demos Reviews Highlights & Tips

Classify cash, cash equivalents, restricted cash, and compensating balances


Cash::Cash Equivalents::Restricted Cash::Compensating Balances::Balance Sheet Classification
8-3 HT8-1
(Coming soon)

Account for sales and collections on account including the impact of cash discounts


Gross Method::Net Method::Cash Discount::Discount Period
8-6 HT8-2
(Coming soon)

Account for impact of sales returns and allowances

Account for the impact of sales returns and allowances
Sales Returns::Variable Consideration::Refund Liability::Estimated Returns Inventory
8-11

Measure and record accounts receivable at net realizable value using the allowance method


Net Realizable Value::Allowance Method::CECL Model::Aging Schedule::Expected Credit Losses
8-13 HT8-4
(Coming soon)

Measure and record notes receivable

Note Receivable::Face Value::Effective-Interest Method::Discount on Note Receivable
8-20 HT8-5
(Coming soon)

Account for the sale of receivables and use as a collateral for borrowing


Secured Borrowing::Collateral::Sale with Recourse::Sale Without Recourse::Recourse Liability
8-27 HT8-6
(Coming soon)

Describe receivable disclosures and ratio analyses

Accounts Receivable Turnover::Average Days to Collect Receivables
8-32 HT8-7
(Coming soon)
LO 8-8 APPENDIX 8A

Apply cash controls

Cash Reconciliations::Bank Reconciliation::Accounting Controls
(Coming Soon)
8-35 D8-8A
D8-8B
(Coming soon)
R8-8
(Coming soon)
HT8-8
(Coming soon)
LO 8-9 APPENDIX 8B

Account for impairment of receivables

Bad Debt Expense::Allowance for Doubtful Accounts::Effective-Interest Method::Expected Credit Losses
(Coming Soon)
8-41 D8-9
(Coming soon)
R8-9
(Coming soon)
HT8-9
(Coming soon)
Expand/Collapse All
About Our Team (pg. iii)
Preface (pg. v)
Brief Contents (pg. xvii)
Contents (pg. xviii)
Chapter 1: Accounting Environment and the Conceptual Framework (pg. 1-1)
LO 1-1 Describe the objective of general-purpose financial reporting (pg. 1-3)
Objective of Financial Reporting (pg. 1-3)
Implications of Financial Reporting (pg. 1-4)
AICPA Pathways Commission (pg. 1-4)
Demo 1-1 Analyzing the Objective of Financial Reporting (pg. 1-5)
Review 1-1 Objective of Financial Reporting (pg. 1-6)
LO 1-2 Identify key organizations that determine GAAP and the factors that drive high-quality repor (pg. 1-6)
Historical Development of GAAP (pg. 1-7)
Current Development of GAAP (pg. 1-7)
International Accounting Standards (pg. 1-13)
Factors Driving High-Quality Application of GAAP (pg. 1-14)
Demo 1-2 Determinants of U.S. GAAP (pg. 1-15)
Review 1-2 Determinants of U.S. GAAP (pg. 1-16)
LO 1-3 Describe the qualitative characteristics of, and the constraint on, useful financial informat (pg. 1-16)
Fundamental Qualitative Characteristics (pg. 1-17)
Demo 1-3A Fundamental Qualitative Characteristics of Financial Reporting (pg. 1-18)
Review 1-3A Fundamental Qualitative Characteristics of Financial Reporting (pg. 1-19)
Enhancing Qualitative Characteristics (pg. 1-19)
Demo 1-3B Enhancing Qualitative Characteristics of Financial Reporting (pg. 1-20)
Review 1-3B Enhancing Qualitative Characteristics of Financial Reporting (pg. 1-20)
Cost Effectiveness Constraint (pg. 1-21)
Demo 1-3C Cost Effectiveness Constraint (pg. 1-21)
Review 1-3C Cost Effectiveness Constraint (pg. 1-22)
LO 1-4 Explain financial statement elements in the FASB conceptual framework (pg. 1-22)
Demo 1-4 Identification of Financial Statement Elements (pg. 1-23)
Review 1-4 Financial Statement Elements (pg. 1-24)
LO 1-5 Describe the four key accounting assumptions (pg. 1-24)
Demo 1-5 Identifying Accounting Assumptions (pg. 1-25)
Review 1-5 Accounting Assumptions (pg. 1-25)
LO 1-6 Describe the four key accounting principles (pg. 1-26)
Demo 1-6 Identifying Accounting Principles (pg. 1-27)
Review 1-6 Accounting Principles (pg. 1-27)
Fair Value Hierarchy (pg. 1-27)
More on Recognition (pg. 1-28)
Management Judgment (pg. 1-29)
Reporting Elements of Financial Statements (pg. 1-29)
Applying the Codification to Financial Reporting (pg. 1-30)
Questions (pg. 1-30)
Brief Exercises (pg. 1-31)
Exercises (pg. 1-33)
Accounting Decisions and Judgments (pg. 1-37)
Answers to Review Exercises (pg. 1-41)
Chapter 2: Accounting Information System (pg. 2-1)
LO 2-1 Analyze the effects of economic transactions using the accounting equation (pg. 2-3)
Demo 2-1 Analysis of Transactions Using Accounting Equation (pg. 2-4)
Review 2-1 Analysis of Transactions Using Accounting Equation (pg. 2-5)
LO 2-2 Identify, record, and post transactions (pg. 2-5)
Normal Account Balances (pg. 2-5)
Demo 2-2A Identify Normal Account Balances (pg. 2-6)
The Accounting Cycle (pg. 2-7)
Identify Transactions and Events to be Recorded-Step 1 (pg. 2-7)
Record Transactions and Events in a Journal-Step 2 (pg. 2-8)
Post from Journal to Ledger-Step 3 (pg. 2-8)
Demo 2-2B Identify, Record, and Post Transactions (pg. 2-9)
Review 2-2B Identify, Record, and Post Transactions (pg. 2-12)
LO 2-3 Prepare an unadjusted trial balance (pg. 2-13)
Prepare an Unadjusted Trial Balance-Step 4 (pg. 2-13)
Demo 2-3: Unadjusted Trial Balance (pg. 2-13)
Review 2-3 Unadjusted Trial Balance (pg. 2-14)
LO 2-4 Identify, record, and post adjusting journal entries (pg. 2-14)
Identify, Record, and Post Adjusting Journal Entries-Step 5 (pg. 2-14)
Demo 2-4A Adjusting Journal Entries-Deferrals of Expense (pg. 2-16)
Demo 2-4B Adjusting Journal Entries-Deferral of Revenue (pg. 2-18)
Demo 2-4C Adjusting Journal Entries-Accrual of Expense (pg. 2-19)
Demo 2-4D Adjusting Journal Entries-Accrual of Revenue (pg. 2-21)
Review 2-4 Adjusting Journal Entries (pg. 2-21)
LO 2-5 Prepare an adjusted trial balance (pg. 2-22)
Prepare the Adjusted Trial Balance-Step 6 (pg. 2-22)
Demo 2-5 Adjusted Trial Balance (pg. 2-22)
Review 2-5 Adjusted Trial Balance (pg. 2-23)
LO 2-6 Prepare financial statements from an adjusted trial balance (pg. 2-23)
Prepare Financial Statements-Step 7 (pg. 2-23)
Demo 2-6 Preparation of Financial Statements (pg. 2-24)
Review 2-6 Financial Statement Preparation (pg. 2-25)
LO 2-7 Prepare and post closing entries and prepare a post-closing trial balance (pg. 2-25)
Prepare and Post Closing Entries-Step 8 (pg. 2-25)
Demo 2-7A Record and Post Closing Journal Entries (pg. 2-26)
Prepare a Post-Closing Trial Balance-Step 9 (pg. 2-27)
Demo 2-7B Prepare a Post-Closing Trial Balance (pg. 2-27)
Review 2-7 Closing Entries and Post-Closing Trial Balance (pg. 2-28)
Management Judgment (pg. 2-28)
Management Judgment Required in the Accounting Cycle (pg. 2-28)
Management Judgment Required in Setup of Accounts (pg. 2-29)
Management Judgment for Data Analytics (pg. 2-29)
APPENDIX 2A Convert from cash-basis net income to accrual-basis net income (pg. 2-29)
Conversion of Receipts (Cash Basis) to Revenue (Accrual Basis) (pg. 2-29)
Conversion of Disbursements (Cash-Basis) to Operating Expenses (Accrual-Basis) (pg. 2-29)
Demo 2-8 Conversion from Cash Basis to Accrual Basis (pg. 2-30)
Review 2-8 Conversion from Cash Basis to Accrual Basis (pg. 2-30)
APPENDIX 2B Prepare reversing journal entries (pg. 2-31)
Demo 2-9 Reversing Journal Entries (pg. 2-31)
Review 2-9 Reversing Journal Entries (pg. 2-32)
APPENDIX 2C Utilize an accounting worksheet (pg. 2-32)
Demo 2-10 Preparation of an Accounting Worksheet (pg. 2-33)
Review 2-10 Accounting Worksheet (pg. 2-34)
Questions (pg. 2-34)
Brief Exercises (pg. 2-35)
Exercises (pg. 2-38)
Problems (pg. 2-46)
Accounting Decisions and Judgments (pg. 2-52)
Appendix—Questions (pg. 2-54)
Appendix—Brief Exercises (pg. 2-54)
Appendix-Exercises (pg. 2-55)
Appendix-Problems (pg. 2-57)
Answers to Review Exercises (pg. 2-58)
Chapter 3: Income Statement and Comprehensive Income (pg. 3-1)
LO 3-1 Prepare an income statement using single-step and multiple-step formats, focusing on income f (pg. 3-3)
Income Statement Formats (pg. 3-4)
Demo 3-1 Multiple-Step and Single-Step Income Statement Formats (pg. 3-5)
Review 3-1 Multiple-Step and Single-Step Income Statement Formats (pg. 3-6)
LO 3-2 Report the impact of unusual and infrequent items (pg. 3-7)
Demo 3-2 Reporting an Unusual and/or Infrequent Item (pg. 3-8)
Review 3-2 Reporting an Unusual and/or Infrequent Item (pg. 3-9)
LO 3-3 Prepare an income statement to include discontinued operations (pg. 3-9)
Discontinued Business Component Sold During Reporting Period (pg. 3-10)
Demo 3-3A Discontinued Operations-Component Sold as of Financial Statement Date (pg. 3-11)
Demo 3-3B Discontinued Operations-Component Not Sold as of Financial Statement Date (pg. 3-13)
Review 3-3 Discontinued Operations (pg. 3-14)
LO 3-4 Disclose earnings per share on the income statement (pg. 3-15)
Demo 3-4A Earnings Per Share-With Continuing Operations Only (pg. 3-16)
Demo 3-4B Earnings Per Share-With Discontinued Operations (pg. 3-16)
Review 3-4 Earnings per Share (pg. 3-17)
LO 3-5 Report other comprehensive income (pg. 3-18)
Demo 3-5 Statement of Comprehensive Income Presentations (pg. 3-19)
Review 3-5 Statement of Comprehensive Income Presentations (pg. 3-20)
LO 3-6 Describe the statement of stockholders’ equity (pg. 3-21)
Demo 3-6 Statement of Stockholders’ Equity Presentation (pg. 3-21)
Review 3-6 Statement of Stockholders’ Equity (pg. 3-22)
LO 3-7 Report changes in accounting estimate, changes in accounting principle, and error corrections (pg. 3-22)
Change in Accounting Estimate (pg. 3-22)
Demo 3-7A Change in Accounting Estimate (pg. 3-23)
Change in Accounting Principle (pg. 3-24)
Demo 3-7B Change in Accounting Principle (pg. 3-25)
Error Correction (pg. 3-26)
Demo 3-7C Error Correction (pg. 3-27)
Summary of Accounting Changes and Error Correction (pg. 3-27)
Review 3-8 Interim Financial Reporting (pg. 3-32)
Management Judgment (pg. 3-29)
Income Statement Presentation and Reporting of Comprehensive Income (pg. 3-29)
Classification of a Disposal as Discontinued Operations (pg. 3-29)
Accounting for Changes in Principles and for Errors (pg. 3-29)
APPENDIX 3A Describe interim financial reporting (pg. 3-30)
Demo 3-8 Interim Financial Reporting (pg. 3-32)
Review 3-8 Interim Financial Reporting (pg. 3-32)
Questions (pg. 3-33)
Brief Exercises (pg. 3-34)
Exercises (pg. 3-35)
Problems (pg. 3-40)
Accounting Decisions and Judgments (pg. 3-45)
Appendix-Brief Exercises (pg. 3-48)
Appendix-Exercises (pg. 3-49)
Appendix-Problems (pg. 3-50)
Answers to Review Exercise (pg. 3-51)
Chapter 4: Balance Sheet and Financial Reporting (pg. 4-1)
LO 4-1 Identify classifications of asset, liability, and equity accounts on the balance sheet (pg. 4-3)
Current Asset Classification (pg. 4-4)
Noncurrent Asset Classification (pg. 4-5)
Demo 4-1A Stockholders’ Equity Balance Sheet Presentation (pg. 4-7)
Current Liability Classification (pg. 4-7)
Noncurrent Liability Classification (pg. 4-8)
Demo 4-1B Classifying Liabilities on the Balance Sheet (pg. 4-9)
Stockholders’ Equity (pg. 4-9)
Demo 4-1C Stockholders’ Equity Balance Sheet Presentation (pg. 4-11)
Review 4-1 Balance Sheet Classifications (pg. 4-12)
LO 4-2 Prepare a classified balance sheet (pg. 4-12)
Demo 4-2 Preparing a Classified Balance Sheet (pg. 4-13)
Review 4-2 Preparing a Classified Balance Sheet (pg. 4-15)
LO 4-3 Explain notes accompanying financial statements (pg. 4-15)
Notes Accompanying Financial Statements (pg. 4-15)
Demo 4-3 Financial Statement Disclosure (pg. 4-21)
Review 4-3 Financial Statement Disclosure (pg. 4-22)
LO 4-4 Identify and describe sections of Form 10-K (pg. 4-23)
Selected Content of the Form 10-K (pg. 4-23)
Demo 4-4 Items of the Annual Report on Form 10-K (pg. 4-30)
Review 4-4 Annual Report on Form 10-K (pg. 4-31)
Management Judgment (pg. 4-31)
Elements Reported in the Balance Sheet (pg. 4-31)
Items Reported in Note Disclosures (pg. 4-32)
APPENDIX 4A Describe requirements of segment reporting (pg. 4-32)
Quantitative Thresholds for Reporting Segments (pg. 4-33)
Segment Disclosures (pg. 4-33)
Segment Disclosures (pg. 4-33)
Demo 4-5 Segment Reporting (pg. 4-34)
Review 4-5 Segment Reporting (pg. 4-36)
Questions (pg. 4-36)
Brief Exercises (pg. 4-37)
Exercises (pg. 4-40)
Problems (pg. 4-49)
Accounting Decisions and Judgments (pg. 4-56)
Appendix-Problems (pg. 4-59)
Appendix-Brief Exercises (pg. 4-58)
Appendix-Exercises (pg. 4-58)
Appendix-Problems (pg. 4-59)
Appendix-Accounting Decisions and Judgments (pg. 4-60)
Answers to Review Exercises (pg. 4-62)
Chapter 5: Statement of Cash Flows and Financial Analysis (pg. 5-1)
LO 5-1 Identify operating, investing, and financing activities (pg. 5-3)
Cash Flows from Operating Activities (pg. 5-3)
Cash Flows from Investing Activities (pg. 5-4)
Cash Flows from Financing Activities (pg. 5-4)
Demo 5-1 Classification of Cash Flows (pg. 5-5)
Review 5-1 Classification of Cash Flows (pg. 5-5)
LO 5-2 Prepare an indirect statement of cash flows (pg. 5-6)
Cash Flows from Operating Activities (pg. 5-6)
Cash Flows from Investing and Financing Activities (pg. 5-7)
Financial Statement Disclosures (pg. 5-7)
Demo 5-2 Indirect Method of Cash Flows (pg. 5-8)
Review 5-2 Statement of Cash Flows (pg. 5-11)
LO 5-3 Describe the interrelations of financial statements (pg. 5-11)
Demo 5-3A Applying Definitions of Financial Statement Elements (pg. 5-12)
Demo 5-3B Interrelations of Financial Statements (pg. 5-16)
Review 5-3 Interrelations of Financial Statements (pg. 5-17)
LO 5-4 Perform an investment analysis using the DuPont Framework (pg. 5-17)
Return on Equity and its Interpretation Using DuPont Model (pg. 5-17)
Demo 5-4A Component Analysis of DuPont Model (pg. 5-18)
Integration of DuPont Model Components (pg. 5-20)
Demo 5-4B Integration Analysis of DuPont Model Components (pg. 5-20)
Additional Layers of the DuPont Model (pg. 5-21)
Demo 5-4C Additional Layer Analysis of DuPont Model (pg. 5-22)
Review 5-4 Investment Analysis Using DuPont Framework (pg. 5-23)
LO 5-5 Perform a credit analysis using key ratios (pg. 5-24)
Demo 5-5A Liquidity Ratios (pg. 5-25)
Demo 5-5B Solvency Ratios (pg. 5-26)
Review 5-5 Credit Analysis Using Key Ratios (pg. 5-27)
Summary of Financial Statement Ratios (pg. 5-27)
LO 5-6 Perform horizontal and vertical analyses (pg. 5-29)
Demo 5-6A Horizontal Analysis (pg. 5-29)
Demo 5-6B Vertical Analysis (pg. 5-30)
Review 5-6 Horizontal and Vertical Analyses (pg. 5-31)
LO 5-7 Recognize non-GAAP financial measures (pg. 5-31)
Examples of Non-GAAP Disclosures (pg. 5-31)
Disclosure Requirements of Non-GAAP Measures (pg. 5-32)
Demo 5-7 Non-GAAP Disclosures (pg. 5-33)
Review 5-7 Non-GAAP Disclosures (pg. 5-34)
Management Judgment (pg. 5-35)
Transactions That Directly Impact Net Cash Flows for a Period (pg. 5-35)
Classification of Cash Flows as Operating, Investing, or Financing (pg. 5-35)
Reporting of Non-GAAP Measures in Financial Reporting (pg. 5-35)
APPENDIX 5A Prepare the operating activities section of the statement of cash flows using the direc (pg. 5-36)
Demo 5-8 Operating Activities Section—Direct Method (pg. 5-36)
Review 5-8 Operating Activities Section—Direct Method (pg. 5-38)
Questions (pg. 5-38)
Brief Exercises (pg. 5-38)
Exercises (pg. 5-41)
Problems (pg. 5-50)
Accounting Decisions and Judgments (pg. 5-59)
Appendix-Brief Exercises (pg. 5-61)
Appendix-Exercises (pg. 5-61)
Appendix-Problems (pg. 5-62)
Appendix-Accounting Decisions and Judgments (pg. 5-62)
Answers to Review Exercises (pg. 5-63)
Chapter 6: Time Value of Money (pg. 6-1)
LO 6-1 Explain the calculation of compound interest (pg. 6-3)
Annual Compounding (pg. 6-3)
Quarterly Compounding (pg. 6-3)
Compounding Options (pg. 6-4)
Demo 6-1 Compound Interest (pg. 6-4)
Review 6-1 Compound Interest (pg. 6-4)
LO 6-2 Apply future value concepts to a single amount (pg. 6-5)
Future Value of a Single Amount-Computation through Formula (pg. 6-6)
Future Value of a Single Amount-Computation through Excel (pg. 6-6)
Demo 6-2 Future Value of a Single Amount (pg. 6-7)
Review 6-2 Future Value of a Single Amount (pg. 6-8)
LO 6-3 Apply present value concepts to a single amount (pg. 6-8)
Present Value of a Single Amount-Computation through Formula (pg. 6-8)
Present Value of a Single Amount-Computation through Excel (pg. 6-9)
Demo 6-3A Present Value of a Single Amount (pg. 6-9)
Demo 6-3B Solving for Unknown Arguments (pg. 6-9)
Demo 6-3C Present Value of Warranty-Expected Cash Flow Approach (pg. 6-11)
Review 6-3 Present Value (pg. 6-11)
LO 6-4 Apply future value concepts to an ordinary annuity and an annuity due (pg. 6-13)
Future Value of an Ordinary Annuity-Computation through Formula (pg. 6-13)
Future Value of an Ordinary Annuity-Computation through Excel (pg. 6-13)
Demo 6-4A Future Value of an Ordinary Annu (pg. 6-14)
Future Value of an Annuity Due-Computation through Formula (pg. 6-14)
Future Value of an Annuity Due-Computation through Excel (pg. 6-14)
Demo 6-4B Future Value of an Annuity Due (pg. 6-15)
Future Value of a Deferred Annuity (pg. 6-15)
Demo 6-4C Future Value of a Deferred Annuity (pg. 6-15)
Review 6-4 Future Value of Annuities (pg. 6-16)
LO 6-5 Apply present value concepts to an ordinary annuity and an annuity due (pg. 6-16)
Present Value of an Ordinary Annuity-Computation through Formula (pg. 6-16)
Present Value of an Ordinary Annuity-Computation through Excel (pg. 6-17)
Demo 6-5A Present Value of an Ordinary Annuity (pg. 6-17)
Present Value of an Annuity Due-Computation through Formula (pg. 6-17)
Present Value of an Annuity Due-Computation through Excel (pg. 6-18)
Demo 6-5B Present Value of an Annuity Due (pg. 6-18)
Present Value of a Deferred Annuity (pg. 6-18)
Demo 6-5C Present Value of a Deferred Annuity (pg. 6-19)
Review 6-5 Present Value of Annuities (pg. 6-19)
LO 6-6 Apply time value of money concept to common accounting scenarios (pg. 6-19)
Bond Issuance Price (pg. 6-19)
Lease Payment (pg. 6-20)
Pension Obligations (pg. 6-20)
Lease or Buy (pg. 6-21)
Debt Retirement (pg. 6-21)
Demo 6-6 Application of Time Value of Money (pg. 6-21)
Review 6-6 Application of Time Value of Money (pg. 6-22)
Management Judgment (pg. 6-22)
Estimated Rate Requires Judgment (pg. 6-22)
Estimated Payment Requires Judgment (pg. 6-23)
Estimated Number of Periods Requires Judgment (pg. 6-23)
Traditional vs. Expected Cash Flow Approach (pg. 6-23)
APPENDIX 6A Apply time value of money concept to bond interest amortization (pg. 6-23)
Effective Interest Method of Amortization (pg. 6-23)
Demo 6-7 Bond Interest Amortization (pg. 6-24)
Review 6-7 Note Interest Amortization Table (pg. 6-24)
APPENDIX 6B Apply time value of money concept using a financial calculator and compound interest ta (pg. 6-25)
Time Value of Money-Financial Calculator (pg. 6-25)
Demo 6-8A Time Value of Money—Financial Calculator (pg. 6-25)
Time Value of Money-Compound Interest Tables (pg. 6-25)
Demo 6-8B Time Value of Money—Compound Interest Tables (pg. 6-28)
Review 6-8 Compound Interest Table (pg. 6-31)
Questions (pg. 6-31)
Exercises (pg. 6-34)
Brief Exercises (pg. 6-32)
Problems (pg. 6-39)
Accounting Decisions and Judgments (pg. 6-44)
Appendix-Brief Exercises (pg. 6-47)
Appendix-Exercises (pg. 6-47)
Appendix-Problems (pg. 6-47)
Answers to Review Exercises (pg. 6-48)
Chapter 7: Revenue Recognition (pg. 7-1)
LO 7-1 Apply the five-step revenue recognition process (pg. 7-3)
Demo 7-1 Application of the Five-Step Revenue Recognition Process (pg. 7-4)
Review 7-1 Application of the Five-Step Revenue Recognition Process (pg. 7-5)
LO 7-2 Identify the contract with the customer-Step 1 (pg. 7-5)
Conditions of a Valid Contract (pg. 7-6)
Demo 7-2 Validity of a Contract (pg. 7-7)
Review 7-2 Validity of a Contract (pg. 7-8)
LO 7-3 Identify the performance obligations in the contract-Step 2 (pg. 7-8)
Identification of Separate Performance Obligation(s) (pg. 7-9)
Demo 7-3 Identification of Separate Performance Obligation(s) (pg. 7-11)
Review 7-3 Identification of Separate Performance Obligation(s) (pg. 7-13)
LO 7-4 Determine the transaction price-Step 3 (pg. 7-13)
Fixed Consideration (pg. 7-14)
Variable Consideration (pg. 7-14)
Demo 7-4A Estimating Transaction Price when it Includes Variable Consideration (pg. 7-15)
Demo 7-4B Reducing the Transaction Price for Consideration Payable (pg. 7-16)
Review 7-4 Transaction Price (pg. 7-18)
LO 7-5 Allocate the transaction price to performance obligations in the contract-Step 4 (pg. 7-18)
Adjusted Market Assessment Approach (pg. 7-19)
Expected Cost Plus a Margin Approach (pg. 7-19)
Residual Approach (pg. 7-19)
Demo 7-5A Transaction Price Allocation-Standalone Selling Prices Are Observable (pg. 7-20)
Demo 7-5B Transaction Price Allocation-Standalone Selling Prices Are Estimated (pg. 7-21)
Review 7-5 Allocation of Transaction Price (pg. 7-22)
LO 7-6 Recognize revenue when (or as) the seller satisfies a performance obligation-Step 5 (pg. 7-22)
Recognition of Revenue Over Time (pg. 7-23)
Recognition of Revenue at a Point in Time (pg. 7-24)
Contract Liabilities and Contract Assets (pg. 7-24)
Demo 7-6A Recognition of Revenue at a Point in Time (pg. 7-25)
Demo 7-6B Recognition of Revenue Over Time (pg. 7-26)
Demo 7-6C Recognition of License Revenue (pg. 7-29)
Review 7-6 Revenue Recognition (pg. 7-30)
LO 7-7 Recognize revenue after a contract modification (pg. 7-30)
Demo 7-7 Revenue Recognition with a Contract Modification (pg. 7-31)
Review 7-7 Contract Modification (pg. 7-32)
LO 7-8 Recognize revenue in more complex revenue arrangements (pg. 7-33)
Bill-and-Hold Arrangement (pg. 7-33)
Demo 7-8A Transfer of Control under a Bill-and-Hold Arrangement (pg. 7-33)
Consignment Arrangement (pg. 7-34)
Demo 7-8B Transfer of Control under a Consignment Arrangement (pg. 7-34)
Repurchase Arrangement (pg. 7-35)
Demo 7-8C Transfer of Control under Repurchase Arrangements (pg. 7-35)
Principal/Agent Arrangement (pg. 7-36)
Demo 7-8D Estimating Revenue for Principals and Agents (pg. 7-37)
Review 7-8 Complex Revenue Arrangements (pg. 7-38)
LO 7-9 Describe accounting for contract costs and disclosure requirements for revenue recognition (pg. 7-39)
Contract Costs (pg. 7-39)
Demo 7-9 Accounting for and Reporting of Contract Costs (pg. 7-40)
Financial Reporting (pg. 7-41)
Financial Statement Disclosures (pg. 7-41)
Review 7-9 Contract Costs and Revenue Disclosures (pg. 7-42)
Management Judgment (pg. 7-42)
Step 1: Identify contract(s) with customer (pg. 7-43)
Step 2: Identify performance obligation(s) in the contract (pg. 7-43)
Step 3: Determine the transaction price (pg. 7-43)
Step 4: Allocate transaction price to performance obligation(s) (pg. 7-43)
Step 5: Recognize revenue when (or as) each performance obligation is satisfied through a transfer o (pg. 7-43)
APPENDIX 7A Apply the revenue recognition process to long-term contracts expected to be profitable (pg. 7-43)
Demo 7-10A Long-Term Contract: Revenue Recognized Over Time—Cost-to-Cost Basis (pg. 7-44)
Demo 7-10B Long-Term Contract: Revenue Recognized at a Point in Time (pg. 7-46)
Review 7-10 Long-Term Profitable Construction Project (pg. 7-47)
APPENDIX 7B Apply the revenue recognition process to long-term contracts expected to be unprofitabl (pg. 7-48)
Demo 7-11A Overall Loss on an Unprofitable Contract (pg. 7-48)
Demo 7-11B Current Period Loss on Overall Profitable Contract (pg. 7-50)
Review 7-11 Unprofitable Construction Project (pg. 7-51)
Questions (pg. 7-51)
Brief Exercises (pg. 7-52)
Exercises (pg. 7-56)
Problems (pg. 7-65)
Accounting Decisions and Judgments (pg. 7-67)
Appendix-Questions (pg. 7-70)
Appendix-Brief Exercises (pg. 7-70)
Appendix-Exercises (pg. 7-70)
Appendix-Problems (pg. 7-72)
Answers to Review Exercise (pg. 7-74)
Chapter 8: Cash and Receivables (pg. 8-1)
LO 8-1 Classify cash, cash equivalents, restricted cash, and compensating balances (pg. 8-3)
Demo 8-1Reporting Cash, Cash Equivalents, and Other Current Assets (pg. 8-5)
Review 8-1 Classification of Cash Related Items (pg. 8-6)
LO 8-2 Account for sales and collections on account including the impact of cash discounts (pg. 8-6)
Demo 8-2A Accounting for Sales and Collections under the Gross Method (pg. 8-8)
Demo 8-2B Accounting for Sales and Collections under the Net Method (pg. 8-9)
Review 8-2 Gross Method versus Net Method in Recording Cash Discounts (pg. 8-10)
LO 8-3 Account for the impact of sales returns and allowances (pg. 8-11)
Demo 8-3 Accounting for Sales Returns (pg. 8-11)
Reveiw 8-3 Accounting for Sales Returns (pg. 8-12)
LO 8-4 Measure and record accounts receivable at net realizable value using the allowance method (pg. 8-13)
Allowance Method (pg. 8-13)
Demo 8-4A Entries Under the Allowance Method (pg. 8-14)
Estimating Accounts Receivable at Net Realizable Value (pg. 8-15)
Demo 8-4B Adjusting Accounts Receivable to Net Realizable Value (pg. 8-17)
Review 8-4 Measuring and Recording Receivables at Net Realizable Value (pg. 8-19)
LO 8-5 Measure and record notes receivable (pg. 8-20)
Present Value of Payments Equals the Fair Value of Note (pg. 8-21)
Demo 8-5A Noncurrent Note Receivable [Stated Rate = 10%; Market Rate = 10%] (pg. 8-21)
Demo 8-5B Noncurrent Note Receivable [Stated Rate = 3%; Market Rate = 10%] (pg. 8-22)
Demo 8-5C Noncurrent Note Receivable [Stated Rate = 0%; Market Rate = 10%] (pg. 8-24)
Demo 8-5D Noncurrent Note Receivable [Stated Rate = 8%; Market Rate = 6%] (pg. 8-25)
Review 8-5 Measuring of Note Receivable and Interest (pg. 8-26)
LO 8-6 Account for the sale of receivables and use as collateral for borrowing (pg. 8-27)
Using Accounts Receivable as Collateral for Borrowing (pg. 8-27)
Demo 8-6A Using Receivables as Collateral for Borrowing (pg. 8-28)
Sale of Accounts Receivable without Recourse (pg. 8-29)
Demo 8-6B Sale of Receivables Without Recourse (pg. 8-29)
Sale of Accounts Receivable with Recourse (pg. 8-30)
Demo 8-6C Sale of Receivables With Recourse (pg. 8-30)
Discounting a Note Receivable (pg. 8-31)
Demo 8-6D Discounting a Note Receivable (pg. 8-31)
Review 8-6 Secured Borrowings and Sale of Receivables (pg. 8-32)
LO 8-7 Describe receivable disclosures and ratio analyses (pg. 8-32)
Receivable Disclosures (pg. 8-32)
Accounts Receivable Ratios (pg. 8-34)
Demo 8-7 Accounts Receivable Ratios (pg. 8-34)
Review 8-7 Accounts Receivable Ratio Analyses (pg. 8-35)
Management Judgment (pg. 8-35)
Accounting for Receivables (pg. 8-35)
Guidance for Management Judgment (pg. 8-35)
APPENDIX 8A Apply cash controls (pg. 8-36)
Cash Reconciliations (pg. 8-36)
Demo 8-8A Cash Reconciliations (pg. 8-37)
Bank Reconciliation (pg. 8-38)
Demo 8-8B Bank Reconciliation (pg. 8-38)
Review 8-8 Cash Controls (pg. 8-41)
APPENDIX 8B Account for impairment of noncurrent receivables (pg. 8-42)
Demo 8-9 Recording Impairment of a Note Receivable (pg. 8-42)
Review 8-9 Impairment of a Note Receivable (pg. 8-44)
Questions (pg. 8-44)
Brief Exercises (pg. 8-45)
Exercises (pg. 8-46)
Problems (pg. 8-53)
Accounting Decisions and Judgments (pg. 8-59)
Appendix-Questions (pg. 8-64)
Appendix-Brief Exercises (pg. 8-64)
Appendix-Exercises (pg. 8-65)
Appendix-Problems (pg. 8-67)
Answers to Review Exercises (pg. 8-70)
Chapter 9: Inventory: Measurement (pg. 9-1)
LO 9-1 Determine the physical items included in ending inventory (pg. 9-3)
Recognition of Inventory (pg. 9-3)
Initial Measurement of Inventory (pg. 9-4)
Demo 9-1 Recognition and Measurement of Inventory (pg. 9-5)
Review 9-1 Measurement of Ending Inventory (pg. 9-6)
LO 9-2 Demonstrate accounting in a periodic inventory system (pg. 9-6)
Cost Flow in a Periodic System (pg. 9-7)
Accounting for Purchase Discounts in a Periodic System (pg. 9-7)
Demo 9-2A Periodic Inventory System-Gross Method (pg. 9-7)
Demo 9-2B Periodic Inventory System—Net Method (pg. 9-9)
Review 9-2 Periodic Inventory System (pg. 9-9)
LO 9-3 Demonstrate specific identification, average cost, FIFO, and LIFO in a periodic inventory sy (pg. 9-9)
Inventory Cost-Flow Assumptions in a Periodic Inventory System (pg. 9-10)
Demo 9-3A Specific Identification—Periodic Inventory System (pg. 9-11)
Demo 9-3B Average Cost-Periodic Inventory System (pg. 9-12)
Demo 9-3C FIFO—Periodic Inventory System (pg. 9-13)
Demo 9-3D LIFO-Periodic Inventory System (pg. 9-13)
Comparing Inventory Methods (pg. 9-14)
Review 9-3 Inventory Methods under the Periodic Inventory System (pg. 9-15)
LO 9-4 Demonstrate accounting in a perpetual inventory system (pg. 9-15)
Cost Flow in a Perpetual System (pg. 9-15)
Accounting for Purchase Discounts in a Perpetual System (pg. 9-16)
Demo 9-4A Perpetual Inventory System—Gross Method (pg. 9-16)
Demo 9-4B Perpetual Inventory System—Net Method (pg. 9-17)
Review 9-4 Perpetual Inventory System (pg. 9-18)
LO 9-5 Demonstrate moving average, FIFO, and LIFO in a Perpetual inventory system (pg. 9-18)
Demo 9-5A Moving Average-Perpetual Inventory System (pg. 9-18)
Demo 9-5B FIFO—Perpetual Inventory System (pg. 9-19)
Demo 9-5C LIFO—Perpetual Inventory System (pg. 9-20)
Review 9-5 Inventory Methods under a Perpetual Inventory System (pg. 9-21)
LO 9-6 Explain and compute a LIFO reserve (pg. 9-21)
Demo 9-6 LIFO Reserve (pg. 9-22)
Review 9-6 LIFO Reserve (pg. 9-22)
LO 9-7 Describe and compute the effect of LIFO liquidation (pg. 9-23)
Demo 9-7 Computation of LIFO Liquidation (pg. 9-24)
Review 9-7 LIFO Liquidation (pg. 9-24)
LO 9-8 Apply the dollar-value LIFO method (pg. 9-25)
Step One: Restate Ending Inventory at Base Year Dollars (pg. 9-25)
Step Two: Arrange Restated Inventory Balance into Layers (pg. 9-25)
Step Three: Match Layers to the Appropriate Price Indices (pg. 9-26)
Step Four: Restate Layers of Inventory into Current Year Dollars (pg. 9-26)
Demo 9-8 Dollar-Value LIFO Method (pg. 9-26)
Review 9-8 Dollar-Value LIFO Method (pg. 9-27)
LO 9-9 Perform inventory ratio analysis and interpretation (pg. 9-28)
Inventory Ratios (pg. 9-28)
Demo 9-9 Inventory Ratio Analysis and Interpretation (pg. 9-28)
Review 9-9 Inventory Ratio Analysis (pg. 9-29)
Management Judgment (pg. 9-29)
Management Choice of Inventory Method (pg. 9-30)
Management Decisions in Measuring Inventory (pg. 9-30)
Questions (pg. 9-31)
Brief Exercises (pg. 9-32)
Exercises (pg. 9-34)
Problems (pg. 9-42)
Accounting Decisions and Judgments (pg. 9-48)
Answers to Review Exercises (pg. 9-53)
Chapter 10: Inventory: Additional Issues (pg. 10-1)
LO 10-1 Apply lower-of-cost-or-net realizable value rule to inventory (pg. 10-3)
Lower-of-Cost-or-Net Realizable Value Rule (pg. 10-3)
Demo 10-1 Application of Lower-of-Cost-or-Net Realizable Value Rule (pg. 10-5)
Review 10-1 Application of Lower-of-Cost-or-Net Realizable Value Rule (pg. 10-7)
LO 10-2 Apply lower-of-cost-or-market rule to inventory (pg. 10-7)
Inconsistency in Applying the Inventory Adjustment Rules (pg. 10-8)
Demo 10-2 Application of Lower-of-Cost-or-Market Rule (pg. 10-8)
Review 10-2 Application of Lower-of-Cost-or-Market Rule (pg. 10-10)
LO 10-3 Demonstrate the relative sales value method to allocate costs to inventory (pg. 10-10)
Demo 10-3 Relative Sales Value Method (pg. 10-10)
Review 10-3 Relative Sales Value Method (pg. 10-11)
LO 10-4 Demonstrate the gross profit method to estimate inventory (pg. 10-11)
Applying the Gross Profit Method (pg. 10-12)
Gross Profit Method-Uses and Limitations (pg. 10-12)
Demo 10-4 Estimate Inventory Using Gross Profit Method (pg. 10-13)
Review 10-4 Gross Profit Method (pg. 10-13)
LO 10-5 Demonstrate accounting for purchase commitments (pg. 10-13)
Demo 10-5 Purchase Commitment (pg. 10-14)
Review 10-5 Purchase Commitment (pg. 10-15)
LO 10-6 Describe accounting treatment for changes in inventory methods (pg. 10-15)
Demo 10-6A Change in Inventory Method-Retrospective Approach (pg. 10-17)
Demo 10-6B Change in Inventory Method—Prospective Approach (pg. 10-19)
Review 10-6 Change in Inventory Method (pg. 10-19)
LO 10-7 Describe accounting treatment of inventory errors (pg. 10-20)
Demo 10-7 Inventory Errors (pg. 10-21)
Review 10-7 Inventory Errors (pg. 10-22)
LO 10-8 Estimate ending inventory using the average cost and conventional retail methods (pg. 10-23)
Average Cost and Conventional Retail Inventory Methods (pg. 10-23)
Demo 10-8A Retail Inventory Method-Average Cost Method (pg. 10-24)
Demo 10-8B Retail Inventory Method-Conventional Method (pg. 10-25)
Complicating Factors for Retail Inventory Method (pg. 10-26)
Demo 10-8C Retail Inventory Method-Conventional Method with Complicating Items (pg. 10-26)
Review 10-8 Retail Inventory Method-Conventional Metho (pg. 10-27)
Management Judgment (pg. 10-28)
Lower-of-Cost-or-Net Realizable Rule and the Lower-of-Cost-or-Market Rule (pg. 10-28)
Retail Inventory Method (pg. 10-28)
Purchase Commitments (pg. 10-28)
Gross Profit Method (pg. 10-28)
APPENDIX 10A Estimate ending inventory using LIFO retail and dollar-value LIFO retail methods (pg. 10-29)
LIFO Retail Method (pg. 10-29)
Demo 10-9A LIFO Retail Method (pg. 10-29)
Demo 10-9B Dollar-Value LIFO Method (pg. 10-30)
Review 10-9 LO10-9 LIFO Retail and Dollar Value LIFO Retail Methods (pg. 10-33)
Questions (pg. 10-33)
Brief Exercises (pg. 10-34)
Exercises (pg. 10-37)
Problems (pg. 10-45)
Accounting Decisions and Judgments (pg. 10-51)
Appendix-Questions (pg. 10-53)
Appendix-Brief Exercises (pg. 10-53)
Appendix-Exercises (pg. 10-54)
Appendix-Problems (pg. 10-55)
Answers to Review Exercises (pg. 10-56)
Chapter 11: Property, Plant, and Equipment: Acquisition and Disposition (pg. 11-1)
LO 11-1 Determine costs to capitalize for land, land improvements, equipment, buildings, and constr (pg. 11-3)
Categories of Fixed Assets (pg. 11-3)
Demo 11-1A Acquisition Costs Classified as Property, Plant, & Equipment (pg. 11-5)
Self-Constructed Assets (pg. 11-6)
Demo 11-1B Self-Constructed Assets (pg. 11-6)
Review 11-1 Property, Plant, and Equipment Cost Classification (pg. 11-7)
LO 11-2 Determine costs to capitalize for lump-sum purchases of property, plant, and equipment (pg. 11-7)
Demo 11-2 Lump-Sum Purchase (pg. 11-8)
Review 11-2 Lump-Sum Purchase (pg. 11-9)
LO 11-3 Account for acquisition of property, plant, and equipment through debt and equity issuances (pg. 11-9)
Acquisition of Property, Plant, and Equipment Using Debt (pg. 11-9)
Demo 11-3A Acquisition of Equipment Using a Note Payable (pg. 11-9)
Acquisition of Property, Plant, and Equipment Using Equity (pg. 11-11)
Demo 11-3B Acquisition of Equipment Using Common Stock (pg. 11-11)
Review 11-3 Acquisition of Property, Plant, and Equipment Using Debt and Equity (pg. 11-11)
LO 11-4 Account for acquisition of property, plant, and equipment through donation (pg. 11-12)
Demo 11-4 Acquisition of a Building through Donation (pg. 11-12)
Review 11-4 Equipment Acquired through Donation (pg. 11-12)
LO 11-5 Calculate capitalized interest (pg. 11-13)
Calculation of Capitalized Interest (pg. 11-13)
Demo 11-5 Interest Capitalization (pg. 11-15)
Review 11-5 Interest Capitalization (pg. 11-17)
LO 11-6 Account for asset retirement obligations (pg. 11-18)
Demo 11-6 Asset Retirement Obligation (pg. 11-19)
Review 11-6 Asset Retirement Obligation (pg. 11-20)
LO 11-7 Account for property, plant, and equipment related costs after acquisition (pg. 11-20)
Management Judgment (pg. 11-21)
Capitalizing Fixed Assets (pg. 11-21)
Demo 11-7 Subsequent Acquisition Costs (pg. 11-22)
Review 11-7 Subsequent Acquisition Costs (pg. 11-23)
LO 11-8 Account for disposal of property, plant, and equipment (pg. 11-23)
Demo 11-8 Disposal of Property, Plant, and Equipment (pg. 11-23)
Review 11-8 Disposal of Property, Plant, and Equipment (pg. 11-24)
LO 11-9 Account for exchange of property, plant, and equipment (pg. 11-25)
Demo 11-9A Exchange of Equipment-Full Gain and Loss Recognized (pg. 11-25)
Demo 11-9B Exchange of Equipment-Partial or No Gain Recognized (pg. 11-27)
Review 11-9 Exchange of Assets (pg. 11-28)
Questions (pg. 11-28)
Brief Exercises (pg. 11-29)
Exercises (pg. 11-31)
Problems (pg. 11-38)
Accounting Decisions and Judgments (pg. 11-44)
Answers to Review Exercises (pg. 11-47)
Chapter 12: Depreciation, Impairments, and Depletion (pg. 12-1)
LO 12-1 Calculate depreciation using straight-line, sum-of-the-years’-digits, declining-balance, an (pg. 12-3)
Calculation of Depreciation Expense (pg. 12-4)
Demo 12-1A Straight-Line Depreciation Method (pg. 12-4)
Demo 12-1B Sum-of-the-Years’-Digits Depreciation Method (pg. 12-6)
Demo 12-1C Double-Declining-Balance Depreciation Method (pg. 12-7)
Demo 12-1D Units-of-Production Depreciation Method (pg. 12-9)
Comparison of Depreciation Methods (pg. 12-9)
Review 12-1 Depreciation Methods (pg. 12-11)
LO 12-2 Account for depreciation in partial periods (pg. 12-11)
Demo 12-2A Depreciation Prorated for Partial Period (pg. 12-12)
Demo 12-2B Policy Convention Applied to Partial Period (pg. 12-13)
Review 12-2 Partial Period Depreciation (pg. 12-14)
LO 12-3 Calculate depreciation using group and composite depreciation methods (pg. 12-15)
Demo 12-3 Composite Depreciation Method (pg. 12-16)
Review 12-3 Composite Depreciation Method (pg. 12-17)
LO 12-4 Account for changes in estimate as they relate to depreciation (pg. 12-17)
Demo 12-4 Change in Accounting Estimate (pg. 12-18)
Review 12-4 Change in Accounting Estimate (pg. 12-18)
LO 12-5 Account for changes in depreciation methods (pg. 12-19)
Demo 12-5 Change in Depreciation Method (pg. 12-19)
Review 12-5 Change in Depreciation Method (pg. 12-20)
LO 12-6 Account for errors in reporting property, plant, and equipment (pg. 12-20)
Demo 12-6 Correction of Error (pg. 12-21)
Review 12-6 Correction of Depreciation Error (pg. 12-21)
LO 12-7 Account for impairments of property, plant, and equipment (pg. 12-21)
Identification of Asset Impairment (pg. 12-21)
Demo 12-7 Impairment of Fixed Assets (pg. 12-23)
Review 12-7 Impairment of Fixed Assets (pg. 12-24)
LO 12-8 Account for assets held for sale (pg. 12-24)
Management Judgment (pg. 12-25)
Grouping Assets for Impairment Testing (pg. 12-25)
Applying Impairment Testing (pg. 12-26)
Management Judgment Highlighted in Financial Reporting (pg. 12-26)
Demo 12-8 Asset Held for Sale (pg. 12-26)
Review 12-8 Assets Held for Sale (pg. 12-27)
LO 12-9 Describe property, plant, and equipment disclosures and ratio analyses (pg. 12-28)
Disclosures (pg. 12-28)
Ratio Analysis (pg. 12-28)
Relation between Depreciation Method and Return on Assets (pg. 12-28)
Demo 12-9 Ratio Analysis (pg. 12-29)
Review 12-9 Ratio Analysis (pg. 12-30)
LO 12-10 Record acquisition and depletion of natural resources (pg. 12-30)
Demo 12-10A Natural Resource Acquisition, Depletion, Sale (pg. 12-31)
Demo 12-10B Depletion of Exploration Costs in Oil and Gas (pg. 12-33)
Reveiw 12-10 Accounting for Natural Resources (pg. 12-34)
APPENDIX 12A Calculate MACRS (tax) depreciation (pg. 12-34)
Demo 12-11 MACRS Depreciation Calculation (pg. 12-35)
Review 12-11 MACRS Depreciation (pg. 12-35)
Questions (pg. 12-35)
Brief Exercises (pg. 12-36)
Exercises (pg. 12-38)
Problems (pg. 12-47)
Accounting Decisions and Judgments (pg. 12-54)
Appendix-Questions (pg. 12-57)
Appendix-Brief Exercises (pg. 12-57)
Appendix-Exercises (pg. 12-58)
Appendix-Problem (pg. 12-58)
Answers to Review Exercises (pg. 12-58)
Chapter 13: Intangible Assets and Goodwill (pg. 13-1)
LO13-1 Identify and classify intangible items (pg. 13-3)
Identification of Assets: Intangible Assets and Goodwill (pg. 13-3)
Recognition of Expenses: Internally Generated Intangible Assets and Goodwill (pg. 13-5)
Demo 13-1 Classification of Intangible Items (pg. 13-6)
Review 13-1 Classification of Intangible Items (pg. 13-7)
LO13-2 Determine the initial and subsequent measurements of intangible assets (pg. 13-8)
Initial Measurement of Intangible Assets (pg. 13-8)
Subsequent Measurement of Finite Life Intangible Assets (pg. 13-8)
Demo 13-2 Initial and Subsequent Measurement of Intangible Asset (pg. 13-9)
Review 13-2 Subsequent Measurement of Intangible Assets (pg. 13-10)
LO13-3 Record goodwill resulting from an acquisition (pg. 13-11)
Demo 13-3 Recording of Goodwill (pg. 13-12)
Review 13-3 Recording of Goodwill (pg. 13-14)
LO13-4 Account for impairment and derecognition of intangibles (pg. 13-15)
Impairment of Finite Life Intangible Assets (pg. 13-15)
Demo 13-4A Impairment of Finite Life Intangible Asset—Patent (pg. 13-16)
Impairment of Indefinite Life Intangible Assets (pg. 13-16)
Demo 13-4B Impairment of Finite Life Intangible Asset—Patent (pg. 13-17)
Impairment of Goodwill (pg. 13-18)
Demo 13-4C Impairment of Goodwill (pg. 13-19)
Derecognition of Intangible Assets (pg. 13-19)
Demo 13-4D Derecognition of Intangible Asset—Patent (pg. 13-20)
Review 13-4 Impairment and Derecognition of Intangibles (pg. 13-20)
LO13-5 Account for changes in estimates with intangible assets (pg. 13-21)
Demo 13-5 Change in Estimate—Intangible Asset (pg. 13-21)
Review 13-5 Change in Estimate-Patent (pg. 13-21)
LO13-6 Account for research and development costs (pg. 13-22)
Identifying Research and Development Expense (pg. 13-23)
Demo 13-6A Identification of Research and Development Expense (pg. 13-23)
Accounting for Software Research and Development Costs (pg. 13-24)
Demo 13-6B Accounting for Software Research and Development Costs (pg. 13-25)
Review 13-6 Research and Development Costs (pg. 13-26)
Management Judgment (pg. 13-27)
Identification of Intangibles in a Business Combination (pg. 13-27)
Useful Life (pg. 13-27)
Impairment Testing (pg. 13-27)
Identification of Research and Development Costs (pg. 13-28)
Software Development (pg. 13-28)
Questions (pg. 13-28)
Brief Exercises (pg. 13-28)
Exercises (pg. 13-31)
Problems (pg. 13-36)
Accounting Decisions and Judgments (pg. 13-40)
Answers to Review Exercises (pg. 13-43)
Chapter 14: Investments in Debt and Equity Securities (pg. 14-1)
Expanded Chapter Preview (pg. 14-3)
LO14-1 Account for debt securities measured at amortized cost (pg. 14-4)
Held-to-Maturity Securities (pg. 14-4)
Measurement of HTM Securities (pg. 14-5)
Accounting for HTM Investment Purchased at Face Value (pg. 14-6)
Demo 14-1A HTM Investment Purchased at Par (pg. 14-6)
Accounting for HTM Investment Purchased at a Discount-Effective Interest Method (pg. 14-6)
Demo 14-1B HTM Investment Purchased at a Discount (Effective Interest) (pg. 14-7)
Accounting for HTM Investment Purchased at a Premium-Effective Interest Method (pg. 14-8)
Demo 14-1C HTM Investment Purchased at a Premium (Effective Interest) (pg. 14-8)
Accounting for HTM Investment-Straight-Line Interest Method (pg. 14-10)
Demo 14-1D HTM Investment Purchased at a Discount (Straight-Line Interest Method) (pg. 14-10)
Demo 14-1E HTM Investment Purchased at a Premium (Straight-line Amortization) (pg. 14-11)
Review 14-1 Accounting for HTM Debt Investments at Amortized Cost (pg. 14-12)
LO14-2 Account for debt securities measured at FV-NI (pg. 14-12)
Trading Securities (pg. 14-12)
Demo 14-2A Trading Security Investment (pg. 14-13)
Demo 14-2B Fair Value Option Accounting-Debt Security (pg. 14-16)
Review 14-2 Accounting for TS Debt Investment at FVNI (pg. 14-16)
LO 14-3 Account for debt securities measured at FV-OCI (pg. 14-17)
Available-for-Sale Securities (pg. 14-17)
Demo 14-3A Available-for-Sale Securities—Bonds (pg. 14-18)
Demo 14-3B Portfolio of Available-for-Sale Securities—Bonds (pg. 14-21)
Review 14-3 Accounting for AFS Debt Investment at FV-OCI (pg. 14-23)
Review of Accounting for Debt Securities (pg. 14-24)
LO 14-4 Account for equity securities measured at FV‑NI (pg. 14-25)
Demo 14-4 Equity Investments Measured at FV‑NI (pg. 14-26)
Review 14-4 Accounting for Investments Measured at FVNI (pg. 14-29)
LO 14-5 Account for equity securities following the equity method (pg. 14-29)
Demo 14-5 Equity Method Accounting (pg. 14-31)
Review 14-5 Account for Investment in Common Stock under the Equity Method (pg. 14-33)
Review of Accounting for Equity Securities (pg. 14-33)
LO 14-6 Adjust debt and equity securities for impairment (pg. 14-34)
Held-to-Maturity Debt Investment (pg. 14-34)
Available-for-Sale Debt Investment (pg. 14-34)
Equity Method Investment (pg. 14-35)
Demo 14-6 Loss on Impairment of Investments (pg. 14-36)
Review 14-6 Accounting for Impairment Loss on AFS Investments (pg. 14-37)
Management Judgment (pg. 14-37)
Classification of Debt Securities (pg. 14-37)
Classification of Equity Securities (pg. 14-37)
Estimating Fair Value (pg. 14-38)
Impairment of Certain Securities (pg. 14-38)
APPENDIX 14A Explain the accounting for transfers of investments (pg. 14-38)
Demo 14-7 Accounting for Transfer of Investment (pg. 14-39)
Review 14-7 Accounting for Transfer of Investment (pg. 14-39)
APPENDIX 14B Describe accounting for special-purpose funds and investments in life insurance polici (pg. 14-40)
Special-Purpose Fund (pg. 14-40)
Investment in Life Insurance Policies (pg. 14-40)
Demo 14-8 Accounting for Other Investments (pg. 14-40)
Review 14-8 Accounting for Other Investments (pg. 14-41)
APPENDIX 14C Describe and account for derivatives (pg. 14-42)
Speculative Derivative Instrument-Call Option on Stock (pg. 14-42)
Demo 14-9A Call Option as a Speculative Investment— Underlying is Fair Value of Stock (pg. 14-43)
Hedging Derivative Instrument-Put Option as a Fair Value Hedge (pg. 14-44)
Demo 14-9B Put Option as a Fair Value Hedge—Underlying is an Asset (pg. 14-45)
Hedging Derivative Instrument-Interest Rate Swap as a Fair Value Hedge (pg. 14-46)
Demo 14-9C Interest Rate Swap as a Fair Value Hedge—Underlying is a Liability (pg. 14-47)
Hedging Derivative Instrument-Cash Flow Hedge (pg. 14-48)
Demo 14-9D Futures Contract as a Cash Flow Hedge—Underlying is the Market Price of a Purchase (pg. 14-49)
Summary of Derivative Instruments (pg. 14-50)
Review 14-9 Accounting for Derivatives (pg. 14-51)
Questions (pg. 14-52)
Brief Exercises (pg. 14-53)
Exercises (pg. 14-56)
Problems (pg. 14-66)
Accounting Decisions and Judgments (pg. 14-73)
Appendix-Brief Exercises (pg. 14-80)
Appendix-Exercises (pg. 14-81)
Appendix-Problems (pg. 14-82)
Answers to Review Exercise (pg. 14-84)
Chapter 15: Current Liabilities and Contingencies (pg. 15-1)
LO15-1 Record accounts payable and sales taxes payable (pg. 15-3)
Accounts Payable (pg. 15-3)
Demo 15-1A Accounting for Accounts Payable (pg. 15-4)
Sales Taxes Payable (pg. 15-5)
Demo 15-1B Accounting for Sales Taxes Payable (pg. 15-5)
Review 15-1 Recording Accounts Payable and Sales Taxes Payable (pg. 15-6)
LO15-2 Record customer deposits and advances (pg. 15-6)
Customer Returnable Deposits (pg. 15-7)
Demo 15-2A Accounting for Returnable Deposits (pg. 15-7)
Customer Advance Payments (pg. 15-8)
Demo 15-2B Accounting for Deferred Revenue (pg. 15-8)
Demo 15-2C Accounting for Gift Cards (pg. 15-9)
Review 15-2 Recording Customer Deposits and Advances (pg. 15-11)
LO15-3 Measure and record employee payroll withholdings, employer payroll taxes, employee compensat (pg. 15-11)
Withholdings from Wages of Employees (pg. 15-11)
Demo 15-3A Recording Employee Payroll Withholdings (pg. 15-12)
Accrual for Payroll Taxes (pg. 15-12)
Demo 15-3B Recording Employer Payroll Taxes (pg. 15-12)
Accrual for Compensated Absences (pg. 15-13)
Demo 15-3C Recording Compensated Absences (pg. 15-13)
Bonus Accrual (pg. 15-14)
Demo 15-3D Recording Bonus Accruals (pg. 15-14)
Review 15-3 Recording Payroll Withholding and Taxes, Compensated Absences, and Bonuses (pg. 15-15)
LO15-4 Account for short-term debt and classify debt on the balance sheet (pg. 15-15)
Short-Term Notes Payable-Interest-Bearing (pg. 15-17)
Demo 15-4A Short-Term Note Payable-Interest-Bearing (pg. 15-17)
Short-Term Notes Payable-Issued at a Discount (pg. 15-18)
Demo 15-4B Short-Term Note Payable-Issued at a Discount (pg. 15-18)
Balance Sheet Classification of Debt (pg. 15-19)
Demo 15-4C Balance Sheet Classification of Debt (pg. 15-20)
Review 15-4 Accounting for and Reporting Debt (pg. 15-21)
LO15-5 Describe accounting for subsequent events and contingencies including litigation, warranties, (pg. 15-23)
Loss Contingencies (pg. 15-23)
Demo 15-5A Accounting for Litigation Loss Contingencies (pg. 15-25)
Financial Reporting of Subsequent Events (pg. 15-26)
Demo 15-5B Accounting for Subsequent Events (pg. 15-28)
A Deeper Look at Certain Loss Contingencies (pg. 15-29)
Demo 15-5C Accounting for Warranty Loss Contingencies (pg. 15-31)
Demo 15-5D Accounting for a Gain Contingency (pg. 15-33)
Review 15-5 Reporting of Contingencies and Subsequent Events (pg. 15-33)
LO15-6 Explain liability and contingency disclosures and analyses using liquidity ratios (pg. 15-34)
Disclosure of Current Liabilities and Contingencies (pg. 15-35)
Liquidity Ratios (pg. 15-37)
Demo 15-6 Liquidity Ratios (pg. 15-38)
Review 15-6 Calculating Liquidity Ratios (pg. 15-39)
Questions (pg. 15-39)
Brief Exercises (pg. 15-40)
Exercises (pg. 15-43)
Problems (pg. 15-50)
Accounting Decisions and Judgments (pg. 15-55)
Answers to Review Exercises (pg. 15-58)
Chapter 16: Long-Term Liabilities (pg. 16-1)
LO 16-1 Identify types and features of bonds (pg. 16-3)
Bond Types (pg. 16-4)
Demo 16-1A Bond Types (pg. 16-4)
Bond Features (pg. 16-4)
Demo 16-1B Bond Features (pg. 16-5)
Review 16-1 Bond Types and Features (pg. 16-6)
LO 16-2 Measure and record bonds at issuance (pg. 16-6)
Bond Selling Price at Issuance (pg. 16-6)
Demo 16-2 Determining Selling Price of Bonds at Issuance (pg. 16-7)
Review 16-2 Pricing Issuance of Bonds (pg. 16-10)
LO 16-3 Account for bonds issued at face value (pg. 16-10)
Demo 16-3 Account for Bonds Issued at Face Value (pg. 16-10)
Review 16-3 Account for Bonds Issued at Face value (pg. 16-11)
LO 16-4 Account for bonds issued at a discount (pg. 16-11)
Demo 16-4A Account for Bonds Issued at a Discount [Effective-Interest Method] (pg. 16-12)
Demo 16-4B Account for Bonds Issued at a Discount [Straight-line Amortization] (pg. 16-14)
Demo 16-4C Debt Issuance Costs (pg. 16-16)
Review 16-4 Account for Bonds Issued at a Discount (pg. 16-17)
LO 16-5 Account for bonds issued at a premium (pg. 16-17)
Demo 16-5A Account for Bonds Issued at a Premium [Effective-Interest Method] (pg. 16-18)
Demo 16-5B Account for Bonds Issued at a Premium [Straight-line Amortization] (pg. 16-20)
Review 16-5 Account for Bonds Issued at a Premium (pg. 16-21)
LO 16-6 Measure and record notes at issuance and after issuance (pg. 16-21)
Notes Payable Issued for Cash (pg. 16-22)
Demo 16-6A Note Payable Issued for Cash (pg. 16-22)
Notes Payable Issued for Non-Cash Consideration [Property, Goods, or Services] (pg. 16-25)
Demo 16-6B Note Payable Issued for Non-Cash Consideration (pg. 16-25)
Review 16-6 Accounting for Notes Payable (pg. 16-29)
LO 16-7 Account for extinguishment of debt (pg. 16-29)
Early Debt Extinguishment (pg. 16-29)
Accounting for Early Debt Extinguishment (pg. 16-30)
Demo 16-7 Account for extinguishment of debt (pg. 16-30)
Review 16-7 Accounting for Extinguishment of Debt (pg. 16-31)
LO 16-8 Account for conversion of debt into equity (pg. 16-32)
Accounting for Convertible Debt (pg. 16-32)
Demo 16-8 Accounting for Convertible Debt (pg. 16-33)
Review 16-8 Accounting for Conversion of Debt (pg. 16-34)
LO 16-9 Account for bonds with warrants (pg. 16-34)
Demo 16-9 Accounting for Bonds with Warrants (pg. 16-35)
Review 16-9 Accounting for Debt with Stock Warrants (pg. 16-37)
LO 16-10 Apply the fair value option for liabilities (pg. 16-37)
Demo 16-10 Fair Value Option Accounting for Liabilities (pg. 16-39)
Review 16-10 Accounting for Debt Using the Fair Value Option (pg. 16-39)
LO 16-11 Describe financing disclosures and analyses using leverage ratios (pg. 16-40)
Debt Disclosures with Financial Statements (pg. 16-40)
Demo 16-11A Disclosure of Five-Year Debt Maturities (pg. 16-41)
Financial Leverage Ratios (pg. 16-42)
Demo 16-11B Calculating Leverage Ratios (pg. 16-42)
Review 16-11 Calculating Leverage Ratio (pg. 16-43)
Management Judgment (pg. 16-43)
APPENDIX 16A Account for debt settlement and debt restructuring (pg. 16-43)
Troubled Debt Restructure-Debtor (pg. 16-44)
Demo 16-12A Debt Restructuring and Debt Settlement—DEBTOR Perspective (pg. 16-45)
Troubled Debt Restructure-Creditor (pg. 16-47)
Demo 16-12B Debt Restructuring and Debt Settlement—CREDITOR Perspective (pg. 16-48)
Review 16-12 Accounting for Debt Settlement and Debt Restructuring (pg. 16-49)
Questions (pg. 16-49)
Brief Exercises (pg. 16-50)
Exercises (pg. 16-53)
Problems (pg. 16-60)
Accounting Decisions and Judgments (pg. 16-64)
Appendix-Questions (pg. 16-71)
Appendix-Brief Exercises (pg. 16-71)
Appendix-Exercises (pg. 16-71)
Appendix-Problems (pg. 16-72)
Answers to Review Exercises (pg. 16-72)
Chapter 17: Accounting for Leases (pg. 17-1)
Expanded Chapter Preview (pg. 17-3)
LO17-1 Determine lease types for lessees and lessors and classify leases using lease criteria (pg. 17-4)
Definition of a Lease (pg. 17-4)
Lease Classification Criteria (pg. 17-8)
Lease Classification (pg. 17-10)
Demo 17-1 Analysis of Lease Classification Criteria (pg. 17-11)
Review 17-1 Determine Lease Classification (pg. 17-12)
LO 17-2 Account for a finance lease for a lessee (pg. 17-12)
Lease Liability (pg. 17-13)
Right-of-Use-Asset (pg. 17-13)
Demo 17-2A Lessee—Finance Lease with No Residual Value (pg. 17-15)
Demo 17-2B Lessee—Finance Lease with Guaranteed Residual Value (pg. 17-19)
Demo 17-2C Lessee—Finance Lease with Purchase Option Expected to Exercise (pg. 17-22)
Management Judgment (pg. 17-24)
Identifying a Lease (pg. 17-24)
Classifying a Lease (pg. 17-24)
Accounting for a Lease (pg. 17-24)
Review 17-2 Accounting for a Finance Lease by Lessee (pg. 17-24)
LO17-3 Account for a sales-type lease for a lessor (pg. 17-25)
Lease Receivable (pg. 17-25)
Calculation of Lease Payment (pg. 17-26)
Initial Direct Lease Costs (pg. 17-26)
Demo 17-3A Lessor—Sales-Type Lease with No Residual Value (pg. 17-26)
Demo 17-3B Lessor—Sales-Type Lease with a Guaranteed Residual Value (pg. 17-29)
Review 17-3 Account for Sales-Type Lease by Lessor (pg. 17-32)
LO17-4 Account for an operating lease for a lessee (pg. 17-33)
Straight-Line Lease Expense (pg. 17-33)
Demo 17-4A Lessee—Operating Lease (pg. 17-34)
Demo 17-4B Lessee—Operating Lease with Prepayment, Initial Cost, Incentive (pg. 17-37)
Review 17-4 Accounting for Operating Lease by Lessee (pg. 17-41)
LO17-5 Account for an operating lease for a lessor (pg. 17-42)
Demo 17-5 Lessor—Operating Lease (pg. 17-42)
Review 17-5 Accounting for Operating Lease by Lessor (pg. 17-44)
LO17-6 Explain lease modifications and lease remeasurements (pg. 17-44)
Lease Modifications (pg. 17-44)
Additional Cases of Lease Classification Reassessment and Lease Remeasurement (pg. 17-44)
Demo 17-6 Lease Modifications (pg. 17-45)
Review 17-6 Lease Modifications (pg. 17-47)
LO17-7 Explain the accounting policy election for short-term leases and other lease disclosures (pg. 17-47)
Short-Term Leases (pg. 17-47)
Demo 17-7 Short-Term Leases (pg. 17-48)
Financial Statement Reporting of Leases (pg. 17-48)
Review 17-7 Accounting for Operating Lease by Lessor (pg. 17-50)
APPENDIX 17A Account for direct financing leases by the lessor (pg. 17-50)
Demo 17-8 Lessor—Direct Financing Lease (pg. 17-51)
Review 17-8 Accounting for Direct Financing Leases (pg. 17-53)
APPENDIX 17B Describe the difference in accounting for a sale-leaseback versus a failed sale (pg. 17-54)
Demo 17-9 Sale-leaseback and Failed Sale (pg. 17-55)
Review 17-9 Accounting for Sale-Leaseback (pg. 17-57)
Questions (pg. 17-57)
Brief Exercises (pg. 17-58)
Exercises (pg. 17-61)
Problems (pg. 17-71)
Accounting Decisions and Judgments (pg. 17-76)
Appendix-Brief Exercises (pg. 17-80)
Appendix-Exercises (pg. 17-80)
Answers to Review Exercises (pg. 17-81)
Chapter 18: Income Taxes (pg. 18-1)
Expanded Chapter Preview (pg. 18-3)
LO18-1 Describe taxable temporary differences that lead to deferred tax liabilities and related inco (pg. 18-4)
Demo 18-1 Taxable Temporary Difference Leading to Deferred Tax Liability (pg. 18-6)
Review 18-1 Taxable Temporary Difference Leading to Deferred Tax Liability (pg. 18-8)
LO18-2 Describe deductible temporary differences that lead to deferred tax assets and related income (pg. 18-9)
Demo 18-2 Deductible Temporary Differences Leading to a Deferred Tax Asset (pg. 18-10)
Reveiw 18-2 Deductible Temporary Difference Leading to Deferred Tax Asset (pg. 18-12)
LO18-3 Explain how to record and report a valuation allowance for deferred tax assets (pg. 18-13)
Demo 18-3 Account for Deferred Tax Asset Valuation Allowance (pg. 18-14)
Review 18-3 Tax Asset Valuation Allowance (pg. 18-15)
LO18-4 Describe permanent differences and other items that impact the reported effective tax rate (pg. 18-16)
Other Items that Impact Effective Tax Rate (pg. 18-17)
Demo 18-4A Permanent Difference (pg. 18-17)
Demo 19-4B Multiple Temporary and Permanent Differences (pg. 18-18)
Review 18-4 Multiple Temporary and Permanent Differences (pg. 18-21)
LO18-5 Explain how a change in tax rates impacts deferred taxes (pg. 18-21)
Review 18-5 Change in Enacted Tax Rate (pg. 18-24)
LO 18-6 Describe accounting for net operating loss carryforwards (pg. 18-24)
Demo 18-6 Net Operating Loss Carryforward (pg. 18-25)
Review 18-6 Net Operating Loss Carryforward (pg. 18-27)
LO18-7 Explain and demonstrate accounting for uncertainty in income tax decisions (pg. 18-27)
Step One: Recognition (pg. 18-27)
Step Two: Measurement (pg. 18-27)
Demo 18-7 Uncertain Tax Positions (pg. 18-28)
Review 18-7 Uncertain Tax Benefit (pg. 18-30)
LO18-8 Describe financial statement disclosure for deferred taxes and income tax expense (pg. 18-31)
Financial Statement Presentation (pg. 18-31)
Disclosure Requirements for Income Tax (pg. 18-32)
Demo 18-8 Balance Sheet Classification of Deferred Tax Assets and Liabilities (pg. 18-32)
Review 18-8 Financial Statement Presentation of Deferred Taxes (pg. 18-33)
Management Judgment (pg. 18-33)
Deferred Tax Asset Valuation Allowance (pg. 18-33)
Uncertain Tax Position (pg. 18-34)
APPENDIX 18A Apply intraperiod tax allocation (pg. 18-34)
Demo 18-9 Intraperiod Tax Allocation (pg. 18-34)
Review 18-9 Intraperiod Tax Allocation (pg. 18-35)
Appendix 18B Apply tax effects to changes in accounting principle and error corrections (pg. 18-35)
Change in Accounting Principle (pg. 18-35)
Demo 18-10A Change in Accounting Principle (pg. 18-36)
Error Correction (pg. 18-36)
Demo 18-10B Error Correction (pg. 18-36)
Review 18-10 Change in Accounting Principle and Error Correction (pg. 18-37)
Questions (pg. 18-37)
Brief Exercises (pg. 18-38)
Exercises (pg. 18-40)
Problems (pg. 18-50)
Accounting Decisions and Judgments (pg. 18-53)
Appendix-Brief Exercises (pg. 18-58)
Appendix-Exercises (pg. 18-58)
Appendix-Problems (pg. 18-59)
Answers to Review Exercises (pg. 18-60)
Chapter 19: Pensions and Postretirement Benefits (pg. 19-1)
Expanded Chapter Preview (pg. 19-3)
LO19-1 Describe defined contribution plans and defined benefit plans and the measurement of related (pg. 19-4)
Defined Contribution Plan (pg. 19-4)
Demo 19-1A Accounting for Defined Contribution Plan (pg. 19-5)
Defined Benefit Plan (pg. 19-5)
Demo 19-1B Estimating Pension Obligations (pg. 19-7)
Review 19-1 Defined Contribution and Defined Benefit Pension Plans (pg. 19-8)
LO19-2 Determine the five components of change in projected benefit obligation (pg. 19-9)
Component Changes in the Projected Benefit Obligation (pg. 19-9)
Demo 19-2 Recognizing Changes in the Projected Benefit Obligation (pg. 19-10)
Review 19-2 Determine Changes in the Components of PBO (pg. 19-11)
LO19-3 Reconcile pension plan assets and determine funded status (pg. 19-11)
Reconciliation of Plan Assets (pg. 19-11)
Demo 19-3A Reconcile Pension Plan Assets (pg. 19-12)
Financial Statement Reporting of Funded Status (pg. 19-12)
Demo 19-3B Determination of Funded Status (pg. 19-13)
Review 19-3 Reconciliation of Plan Assets and Determination of Plan’s Funded Status (pg. 19-14)
LO19-4 Determine the five components of pension expense (pg. 19-15)
Service Cost (pg. 19-15)
Interest Cost (pg. 19-15)
Expected Return on Plan Assets (pg. 19-15)
Amortization of Prior Service Cost (pg. 19-16)
Amortization of Pension Gain/Loss (pg. 19-16)
Demo 19-4 Components of Pension Expense (pg. 19-17)
Review 19-4 Components of Pension Expense (pg. 19-19)
LO19-5 Record prior service cost amendment, pension expense, gains and losses, funding, and benefits (pg. 19-19)
Recording Prior Service Cost Amendment (pg. 19-19)
Recording Pension Expense (pg. 19-19)
Recording Deferral of Pension Gains and Losses (pg. 19-20)
Recording Employer Contributions (pg. 19-20)
Recording Benefits Paid (pg. 19-20)
Demo 19-5 Recording the Impact of Defined Benefit Plan (pg. 19-20)
Review 19-5 Recording the Impact of a Defined Benefit Plan (pg. 19-22)
LO19-6 Describe the reporting of pensions in financial statements (pg. 19-23)
Income Statement (pg. 19-23)
Statement of Comprehensive Income and Statement of Stockholders’ Equity (pg. 19-23)
Balance Sheet (pg. 19-23)
Demo 19-6 Pension Plan Reporting (pg. 19-24)
Disclosure Requirements (pg. 19-25)
Management Judgment (pg. 19-25)
Review 19-6 Reporting a Defined Benefit Pension Plan (pg. 19-26)
LO19-7 Use a pension worksheet to record pension journal entries (pg. 19-26)
Demo 19-7 Preparation of a Pension Worksheet (pg. 19-27)
Review 19-7 Record Pension Entries Using a Pension Worksheet (pg. 19-28)
APPENDIX 19A Explain postretirement benefit plans and differences from pensions plans (pg. 19-28)
Disclosure (pg. 19-29)
Demo 19-8 Determining Obligations for Postretirement Benefit Plan (pg. 19-30)
Review 19-8 Determining Obligations for Postretirement Benefit Plan (pg. 19-31)
APPENDIX 19-9B Record postretirement benefit expense, gains and losses, funding, and benefit (pg. 19-31)
Demo 19-9 Recording Entries for Postretirement Benefit Plan (pg. 19-31)
Review 19-9 Recording Entries for Postretirement Benefit Plan (pg. 19-34)
APPENDIX 19C Allocate prior service cost using the service method (pg. 19-34)
Demo 19-10 Allocation of Prior Service Cost (pg. 19-35)
Review 19-10 Allocation of Prior Service Costs (pg. 19-35)
Questions (pg. 19-36)
Brief Exercises (pg. 19-36)
Exercises (pg. 19-39)
Problems (pg. 19-46)
Accounting Decisions and Judgments (pg. 19-51)
Appendix-Brief Exercises (pg. 19-58)
Appendix-Exercises (pg. 19-59)
Appendix-Problems (pg. 19-60)
Answers to Review Exercises (pg. 19-61)
Chapter 20: Stockholders’ Equity (pg. 20-1)
LO 20-1 Describe and report stockholders’ equity key components (pg. 20-3)
Key Components of Stockholders’ Equity (pg. 20-3)
Demo 20-1 Stockholders’ Equity Key Components (pg. 20-6)
Review 20-1 Components of Stockholders’ Equity (pg. 20-6)
LO 20-2 Account for common stock issuance including par and no-par, cash and noncash, and issue cos (pg. 20-8)
Par Value Common Stock (pg. 20-8)
Demo 20-2A Par Value Stock Issuance (pg. 20-9)
No-Par and Stated Value Common Stock (pg. 20-9)
Demo 20-2B No-Par Common Stock Issuance (pg. 20-9)
Common Stock Issued for Noncash Consideration (pg. 20-10)
Demo 20-2C Common Stock Issuance for Noncash Consideration (pg. 20-10)
Multiple Securities Issuance (pg. 20-10)
Demo 20-2D Multiple Securities Issuance (pg. 20-10)
Stock Issue Costs (pg. 20-11)
Demo 20-2E Common Stock Issue Costs (pg. 20-12)
Review 20-2 Accounting for Common Stock Issuance (pg. 20-12)
LO 20-3 Account for reacquisition of common stock (pg. 20-12)
Treasury Stock (pg. 20-13)
Demo 20-3A Reacquisition of Common Stock—Treasury Stock (pg. 20-14)
Direct Retirement of Stock (pg. 20-15)
Demo 20-3B Reacquisition of Common Stock—Direct Retirement (pg. 20-15)
Review 20-3 Reacquisition of Common Stock (pg. 20-16)
LO 20-4 Describe and account for preferred stock (pg. 20-16)
Initial Recognition of Preferred Stock (pg. 20-16)
Subsequent Recognition of Preferred Stock (pg. 20-17)
Demo 20-4 Accounting for Preferred Stock (pg. 20-18)
Review 20-4 Accounting for Preferred Stock (pg. 20-19)
LO 20-5 Record dividend distributions, including cash, property, and liquidating (pg. 20-19)
Cash Dividends (pg. 20-19)
Demo 20-5A Cash Dividend Distributions (pg. 20-20)
Property Dividends (pg. 20-22)
Demo 20-5B Property Dividend Distributions (pg. 20-22)
Liquidating Dividends (pg. 20-22)
Demo 20-5C Liquidating Dividend Distributions (pg. 20-23)
Review 20-5 Recording Dividend Distributions (pg. 20-23)
LO 20-6 Account for stock dividends and stock splits (pg. 20-24)
Stock Dividends (pg. 20-24)
Demo 20-6A Accounting for Small Stock Dividends (pg. 20-25)
Management Judgment (pg. 20-26)
Demo 20-6B Accounting for a Stock Split Effected in the Form of a Dividend (pg. 20-27)
Stock Splits (pg. 20-27)
Demo 20-6C Accounting for Stock Splits (pg. 20-28)
Review 20-6 Account for Stock Dividends and Stock Splits (pg. 20-29)
LO 20-7 Describe comprehensive income, its components, and how it is reported (pg. 20-29)
Demo 20-7 Reporting of Comprehensive Income and Accumulated OCI (pg. 20-30)
Review 20-7 Comprehensive Income and Accumulated OCI (pg. 20-31)
LO 20-8 Explain stockholders’ equity disclosures and key analyses (pg. 20-32)
Equity Disclosures (pg. 20-32)
Equity Ratios (pg. 20-33)
Demo 20-8 Equity Ratios (pg. 20-33)
Review 20-8 Computing Equity Ratios (pg. 20-34)
Questions (pg. 20-35)
Brief Exercises (pg. 20-35)
Exercises (pg. 20-38)
Problems (pg. 20-47)
Accounting Decisions and Judgments (pg. 20-52)
Answers to Review Exercises (pg. 20-61)
Chapter 21: Share-Based Compensation and Earnings per Share (pg. 21-1)
LO21-1 Account for restricted stock plans (pg. 21-3)
Restricted Stock SHARE Awards (pg. 21-3)
Restricted Stock UNIT Awards (pg. 21-4)
Demo 21-1A Accounting for Restricted Stock Shares (pg. 21-4)
Demo 21-1B Accounting for Restricted Stock Units (pg. 21-5)
Review 21-1 Accounting for Restricted Stock Plans (pg. 21-7)
LO21-2 Account for stock options (pg. 21-8)
Demo 21-2 Accounting for Restricted Stock Units (pg. 21-10)
Review 21-2 Accounting for Stock Options (pg. 21-13)
LO21-3 Account for employee share purchase plans (pg. 21-13)
Demo 21-3 Accounting for Employee Share Purchase Plans (pg. 21-14)
Review 21-3 Accounting for Employee Share Purchase Plans (pg. 21-15)
LO21-4 Compute earnings per share (EPS) with a simple capital structure (pg. 21-15)
Demo 21-4 Earning per Share Calculation—Simple Capital Structure (pg. 21-15)
Review 21-4 Calculation of Basic EPS (pg. 21-16)
LO21-5 Compute EPS given share issuances, buybacks, dividends, -and splits (pg. 21-16)
Share Issuances and Buybacks (pg. 21-16)
Stock Dividends and Stock Splits (pg. 21-16)
Preferred Stock Dividends (pg. 21-17)
Demo 21-5 EPS Calculations—Simple Capital Structure (pg. 21-17)
Review 21-5 Calculation of Basic EPS (pg. 21-20)
LO 21-6 Compute EPS using if-converted method for convertible securities (pg. 21-20)
Convertible Bonds and Convertible Preferred Stock (pg. 21-21)
Demo 21-6A EPS Calculations—Convertible Bonds (pg. 21-22)
Demo 21-6B EPS Calculations—Convertible Preferred Stock (pg. 21-24)
Review 21-6 Calculation of EPS-Convertible Bonds and Convertible Preferred Stock (pg. 21-25)
LO21-7 Compute EPS using treasury stock method for options, warrants, and restricted stock (pg. 21-25)
Stock Options and Warrants (pg. 21-25)
Demo 21-7A EPS Calculations—Convertible Preferred Stock (pg. 21-26)
Demo 21-7B EPS Calculations—Restricted Stock (pg. 21-28)
Review 21-7 EPS Calculations-Options and Restricted Stock (pg. 21-29)
LO21-8 Compute EPS using contingent methods (pg. 21-30)
Demo 21-8 Compute EPS Given Contingently Issuable Shares (pg. 21-30)
Review 21-8 Calculation of EPS Given Contingently Issuable Shares (pg. 21-31)
LO21-9 Compute EPS given multiple securities and describe EPS financial statement presentation (pg. 21-31)
Demo 21-9 Compute EPS Given Contingently Issuable Shares (pg. 21-31)
Presentation and Disclosure of EPS (pg. 21-33)
Review 21-9 Calculation of EPS—Multiple Securities (pg. 21-34)
Management Judgment (pg. 21-35)
Share-Based Compensation (pg. 21-35)
EPS Calculations (pg. 21-35)
APPENDIX 21A Describe accounting for stock appreciation rights (pg. 21-35)
Recording SARs as Equity (pg. 21-36)
Recording SARs as a Liability (pg. 21-36)
Demo 21-10 Stock Appreciation Rights (pg. 21-36)
Review 21-10 Accounting for Stock Appreciation Rights (pg. 21-38)
Questions (pg. 21-38)
Brief Exercises (pg. 21-39)
Exercises (pg. 21-41)
Problems (pg. 21-48)
Accounting Decisions and Judgments (pg. 21-52)
Appendix-Brief Exercises (pg. 21-57)
Appendix-Problems (pg. 21-58)
Answers to Review Exercise (pg. 21-59)
Chapter 22: Statement of Cash Flows Revisited (pg. 22-1)
LO22-1 Identify operating, investing, and financing activities, and the statement of cash flows for (pg. 22-3)
Cash Flows from Operating Activities (pg. 22-3)
Cash Flows from Investing Activities (pg. 22-4)
Cash Flows from Financing Activities (pg. 22-5)
Format of Statement of Cash Flows (pg. 22-5)
Demo 22-1 Identify Operating, Investing, and Financing Activities (pg. 22-6)
Review 22-1 Identify Operating, Investing, and Financing Activities (pg. 22-6)
LO22-2 Prepare the operating activities cash flow section of the statement of cash flows using the i (pg. 22-7)
Operating Activities Cash Flow Section-Indirect Method (pg. 22-7)
Demo 22-2 Net Cash Flows from Operating Activities (pg. 22-9)
Other Items Affecting Cash Flows from Operating Activities (pg. 22-12)
Review 22-2 Prepare the Operating Activities Section (pg. 22-15)
LO22-3 Prepare the investing activities section of the statement of cash flows (pg. 22-15)
Demo 22-3 Net Cash Flows from Investing Activities (pg. 22-16)
Other Item Affecting Cash Flows from Investing Activities (pg. 22-17)
Review 22-3 Prepare the Investing Activities Section (pg. 22-17)
LO22-4 Prepare the financing activities section of the statement of cash flows (pg. 22-17)
Demo 22-4 Net Cash Flows from Financing Activities (pg. 22-18)
Other Financing Activities (pg. 22-20)
Review 22-4 Prepare the Financing Activities Section (pg. 22-22)
LO22-5 Describe required disclosures including that for noncash transactions (pg. 22-22)
Cash Flow Reporting (pg. 22-22)
Noncash Transactions (pg. 22-23)
Management Judgment (pg. 22-23)
Classification of Cash Flows (pg. 22-23)
Transactions Affecting Cash Flow Presentation (pg. 22-24)
Demo 22-5 Disclosure of Noncash Transactions (pg. 22-24)
Review 22-5 Disclosure of Noncash Transactions (pg. 22-25)
LO22-6 Utilize a worksheet to prepare the statement of cash flows (pg. 22-26)
Demo 22-6 Cash Flow Worksheet (pg. 22-26)
Review 22-6 Preparing Cash Flow Worksheet Entries (pg. 22-29)
LO22-7 Prepare the operating cash flow section of the statement of cash flows using the direct metho (pg. 22-29)
Demo 22-7 Cash Flows from Operating Activities under Direct Method (pg. 22-30)
Review 22-7 Cash Flows from Operating Activities Using the Direct Method (pg. 22-35)
Appendix 22A LO22-8 Prepare a statement of cash flows using the cash T-Account approach (pg. 22-36)
Demo 22-8 Cash T-Account Approach (pg. 22-36)
Review 22-8 Cash T-Account Approach (pg. 22-38)
Questions (pg. 22-38)
Brief Exercises (pg. 22-39)
Exercises (pg. 22-42)
Problems (pg. 22-54)
Accounting Decisions and Judgments (pg. 22-64)
Appendix-Exercise (pg. 22-69)
Appendix-Problem (pg. 22-69)
Answers to Review Exercises (pg. 22-69)
Appendix A: Accounting Changes and Error Analysis Revisited (pg. A-1)
Expanded Appendix Overview (pg. A-3)
LOA-1 Demonstrate the accounting for a change in accounting estimate and a change in accounting esti (pg. A-4)
Disclosure (pg. A-5)
LOA-2 Demonstrate the accounting for a change in accounting principle (pg. A-5)
Voluntary Change in Accounting Principle-Retrospective Approach (pg. A-6)
Voluntary Change in Accounting Principle-Prospective Approach (pg. A-6)
Required Change in Accounting Principle Based on a Codification Update (pg. A-7)
Direct and Indirect Effects (pg. A-8)
Disclosure Requirements (pg. A-8)
Management Judgment (pg. A-9)
LOA-3 Demonstrate the accounting for an error correction (pg. A-9)
Disclosure (pg. A-10)
LOA-4 Describe the accounting for a change in reporting entity (pg. A-12)
Disclosure (pg. A-12)
Demo A-4 Identification of a Change in Reporting Entity (pg. A-13)
Questions (pg. A-13)
Brief Exercises (pg. A-15)
Exercises (pg. A-15)
Problems (pg. A-17)
Analyzing Financial Statements (pg. A-19)
Appendix B: IFRS (pg. B-1)
Appendix C: Data Analytics (pg. C-1)
Index (pg. I-1)
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.


Leslie Hodder

Leslie Hodder

Professor and the Dean’s Faculty Fellow at Indiana University’s Kelley School of Business

Professor Hodder received her B.B.A and M.B.A./M.Acc from the University of New Mexico and her Ph.D. from the University of Texas at Austin. Prior to obtaining her Ph.D., Professor Hodder was Chief Financial Officer of a publicly traded commercial bank holding company in southern California. Professor Hodder was on faculty at Stanford University before joining the Indiana University faculty in 2003. Her research has appeared in top accounting journals, including The Accounting Review, Review of Accounting Studies, Contemporary Accounting Research, and Accounting Organizations and Society. She is the past winner of the American Accounting Association’s Wildman Award, is a past and present Editor at The Accounting Review, and is currently on the Executive Board of the American Accounting Association. Professor Hodder teaches financial-accounting-related topics in the undergraduate, master, and doctoral programs. Over her teaching career, she has developed or co-developed six courses in financial accounting, including Intermediate Financial Accounting I and II, Applied Audit and Accounting Research, and Detecting Earnings Management with a focus on data analytics. Professor Hodder currently teaches intermediate accounting to undergraduates.


Karen K. Nelson

Karen K. Nelson

M.J. Neeley Professor of Accounting at TCU. Former Harmon Whittington Professor of Accounting and past Accounting Area Coordinator at the Jones Graduate School of Business at Rice University.

Karen previously served on the faculty at Rice University, the Stanford University Graduate School of Business, and as a visiting professor at the University of Michigan. She earned her Ph.D. at the University of Michigan and a bachelor’s degree (summa cum laude) from the University of Colorado. She also holds a CPA license from the state of Colorado. Professor Nelson’s research focuses on financial reporting and disclosure issues, including the role of regulators, auditors, and private securities litigation in monitoring financial reporting quality. She has held research seminars at over 50 leading business schools in the U.S. and abroad, and published in a variety of leading academic journals including The Accounting Review, Journal of Accounting and Economics, Journal of Accounting, and Review of Accounting Studies. Her research has been featured in the financial press in publications such as The Wall Street Journal, Business Week, and Forbes. She is an active member of the American Accounting Association and serves on the Editorial Board of The Accounting Review. She has taught financial accounting at all levels, and her students have honored her with numerous awards for teaching excellence. She currently teaches intermediate accounting to undergraduates and financial accounting to MBAs. She is a member of the Standing Advisory Group of the Public Company Accounting Oversight Board.

Darren Roulstone

Darren Roulstone

Distinguished Professor of Accounting at the Ohio State University’s Fisher College of Business.

Professor Roulstone earned his doctorate at the University of Michigan’s Ross School of Business and BS and MAcc degrees from Brigham Young University’s Marriott School of Management. Professor Roulstone currently directs the Ph.D. program in Accounting and Management Information Systems at Fisher. He teaches a seminar on capital markets research and the core course in financial reporting in Fisher’s Master of Accounting program. He has extensive experience teaching intermediate accounting at both the undergraduate and graduate levels. Prior to joining Fisher, he was on the faculty at the University of Chicago’s Booth School of Business where he taught financial accounting and financial statement analysis in the full-time, evening, and weekend MBA programs. Professor Roulstone’s research focuses on information intermediaries, information acquisition by investors, and textual analysis of corporate disclosure. He serves on the editorial boards of several accounting journals and is currently an associate editor at Management Science. His research has been published in a variety of leading academic journals including The Accounting Review, Journal of Accounting and Economics, Journal of Accounting Research, Management Science, and Review of Accounting Studies. He is a past president of the American Accounting Association’s Financial Accounting and Reporting Section.


Amie L. Dragoo

Amie L. Dragoo

Professor of Accounting and Educational Consultant

Former Accounting Department Chair at Edgewood College, Professor Dragoo earned her BA and MBA from Michigan State University, and her doctorate from Edgewood College. She holds a CPA license, and for nearly 15 years has been a Becker Professional Education faculty instructor. Prior to her experiences in higher education, Professor Dragoo was a senior business assurance associate with PricewaterhouseCoopers LLP (formerly Coopers & Lybrand L.L.P.). Professor Dragoo has extensive teaching experiences, including courses in Intermediate Accounting I and II, Cost Accounting, Advanced Cost Management, Strategic Financial Management, and other advanced courses in financial and managerial accounting. She has received a number of teaching awards including the School of Business Outstanding Faculty Award and the Estervig-Beaubien Excellence in Teaching and Mentoring Award. She has also worked as an independent consultant, including projects in higher education, and has worked with several corporate clients. Professor Dragoo’s research has been published in the Journal of Education for Business and the Journal of Continuing Higher Education and she has contributed to numerous articles published by organizations affiliated with the AICPA. She has been involved in many community-oriented programs including the Volunteer Income Tax Assistance (VITA) program.


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