Chapter 23 Intermediate Accounting Solutions

[Mahmod Ohner]

Integralto 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.

Intermediate Accounting is intended for use following the first financial accounting course at either the undergraduate or graduate level. This book supports an intermediate accounting series offered to accounting and some finance majors, typically in a two-course sequence (three-course series in some cases). The topics in intermediate accounting are relevant to approximately 70% of the Financial Accounting Reporting (FAR) section of the Uniform CPA Examination. This rigorous exam ensures that only qualified individuals become licensed as U.S. Certified Public Accountants (CPAs).

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.

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.

Each chapter opens with a grid that identifies each learning objective for the chapter, the related pages, demonstrations, review applications, and end of chapter assignments. This allows students and faculty to quickly grasp the chapter contents and to efficiently navigate to the desired topic.

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.

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.

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.

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.

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 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.

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Please ensure that your code is being entered correctly. A common issue is the confusion of certain characters. We tend to see capital "I's" as in Iowa confused with lowercase "l's" like leopard and/or the number "1".

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Once analyzed the basics of the accounting model and cycle and the accounting treatment of the main operating activities of the company, this second course in financial accounting is intended to complete with the accounting treatment of the investing and financing activities carried out by the corporations. Accounting solutions provided by the International Financial Reporting Standards issued by the IASB are discussed in each chapter. Firstly, we study the problems related with the acquisition, use and disposal of the basic tangible and intangible infrastructure of the company and with leases. Subsequently the different types of financial assets and liabilities and other financing alternatives such as equity, subsidies and provisions are faced. Finally we deal with the accounting for income taxes. Throughout the course the effects of the above accounting treatments on the annual accounts of the company (balance sheet, income statement and cash flow statement mainly) are permanently present.

Once analyzed the basics of the accounting model, the stages of the accounting cycle and the main operating activities of the company, this second course in financial accounting is intended to complete with the accounting treatment of the investing and financing activities carried out by the corporations. Accounting solutions appearing in the International Financial Reporting Standards issued by the IASB are discussed in each chapter. Firstly, we study the problems related with the acquisition, use and disposal of the basic tangible and intangible infrastructure of the company and with leases. Subsequently the different types of financial assets and liabilities and other financing alternatives such as equity, grants and provisions are faced. Finally we deal with the accounting for income taxes. Throughout the course the effects of the above accounting treatments on the annual accounts of the company (balance sheet, income statement and cash flow statement mainly) are permanently present as well as the Conceptual Framework for Financial Reporting.

The course is organized around two 100-minute sessions per week: a lecture and a lab session. Power point and other material used will be taken mostly from the textbook website. For each session there will be assigned readings and problems from the book. Active student involvement in the learning process is encouraged. In order to participate, students will have to be prepared. It is virtually impossible to do well in this class without devoting a considerable amount of time to reading in advance and solving homework assignments. Regular attendance and active participation are expected. Groups of 2 and 4 students will be organized for the different activities and presentations.

Six office hours will be available each week. A MiAulario web course will also be available which will contain copies of course materials (the course outline and schedule, lecture power point notes and solutions for some of the cases) and other accounting-related information. You can communicate with the lecturer and your classmates using the communication functions of the web course.

Learning Outcomes Evaluation Weight (%) Re-examination LO_A1. to A5. Participation and discussion in lectures and lab sessions 15% NO LO_A1. to A5. Team presentations and case assignments 25% NO LO_A1. to A5. Exams 60% YES Additionally, the following minimum requirements will be applied:

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