1 The Environment and Conceptual Framework of Financial Reporting
1.1 Financial Reporting Environment 1-2
1.2 Conceptual Framework 1-11
1.3 Assumptions and Principles 1-18
1.4 Major Challenges in Financial Reporting 1-27
Analytics in Action Big Data for Big Decisions 1-30
2 The Accounting Information System
2.1 Accounting Information System 2-2
2.2 Analyze and Record Business Transactions 2-8
Analytics in Action This System Is Full of Data 2-19
2.3 Adjusting Entries 2-23
2.4 Preparing Financial Statements 2-37
2.5 Financial Statements for a Merchandising Company 2-45
Appendix 2A: Cash-Basis Accounting versus Accrual-Basis Accounting 2-48
Appendix 2B: Using Reversing Entries 2-54
Appendix 2C: Using a Worksheet: The Accounting Cycle Revisited 2-56
3 Income Statement, Related Information, and Revenue Recognition
3.1 Income Statement 3-2
Analytics in Action Income Statement Dashboards 3-8
3.2 Reporting Special Income Items 3-11
3.3 Stockholdersâ Equity Statements 3-19
3.4 Revenue Recognitionâ"The Fundamentals 3-21
3.5 Quality of Earnings 3-29
Appendix 3A: Accounting Changes and Errors 3-33
4 Balance Sheet and Statement of Cash Flows
4.1 Balance Sheet 4-1
4.2 Statement of Cash Flows 4-16
Appendix 4A: Additional Information 4-26
Appendix 4B: Ratio Analysisâ"A Reference 4-33
5 Accounting and the Time Value of Money
5.1 Basic Time Value Concepts 5-2
5.2 Single-Sum Problems 5-8
5.3 Annuities (Future Value) 5-14
5.4 Annuities (Present Value) 5-21
5.5 Other Time Value of Money Issues 5-27
Analytics in Action Using Present Value for Investment Analysis 5-31
Appendix 5A: Technology Tools for Time Value of Money Problems 5-34
Time Value of Money Tables 5-60
6 Cash and Receivables
6.1 Cash 6-1
6.2 Receivables 6-6
6.3 Valuation of Accounts Receivable 6-13
Analytics in Action Predicting the Future 6-19
6.4 Notes Receivable 6-20
6.5 Other Issues 6-28
Appendix 6A: Cash Controls 6-36
Appendix 6B: Collectibility Assessment Based on Expected Cash Flows 6-42
7 Valuation of Inventories: A Cost-Basis Approach
7.1 Inventory Issues 7-2
7.2 Goods and Costs Included in Inventory 7-8
7.3 Which Cost Flow Assumption to Adopt? 7-14
7.4 Special Issues Related to LIFO 7-24
7.5 Effect of Inventory Errors 7-32
Analytics in Action Inventory Matters 7-35
8 Inventories: Additional Valuation Issues
8.1 Lower-of-Cost-or-Net Realizable Value 8-2
8.2 Lower-of-Cost-or-Market 8-7
Analytics in Action Role of Big Data in Inventory 8-11
8.3 Other Valuation Approaches 8-13
8.4 The Gross Profit Method of Estimating Inventory 8-19
8.5 Retail Inventory Method 8-22
8.6 Presentation and Decision Analysis 8-31
9 Acquisition and Disposition of Property, Plant, and Equipment
9.1 Property, Plant, and Equipment 9-2
9.2 Interest Costs During Construction 9-10
9.3 Valuation of Property, Plant, and Equipment 9-16
9.4 Costs Subsequent to Acquisition 9-26
9.5 Disposition of Property, Plant, and Equipment 9-32
Analytics in Action Capital Expenditure Trends 9-34
Appendix 9A: Accounting for Contributions 9-35
10 Depreciation, Impairments, and Depletion
10.1 Depreciationâ"A Method of Cost Allocation 10-2
10.2 Impairments 10-15
10.3 Depletion 10-20
10.4 Presentation and Decision Analysis 10-25
Analytics in Action A Better Way to Estimate 10-28
Appendix 10A: Income Tax Depreciation 10-29
11 Intangible Assets
11.1 Intangible Asset Issues 11-2
11.2 Types and Presentation of Intangible Assets 11-8
11.3 Goodwill 11-17
Analytics in Action Goodwill Hunting? 11-21
11.4 Research and Development Costs 11-25
12 Current Liabilities and Contingencies
12.1 Current Liabilities 12-2
12.2 Unearned Revenues 12-14
12.3 Contingencies 12-19
12.4 Presentation and Decision Analysis 12-29
Analytics in Action Current Ratio Analysis Can Lead to Innovation 12-34
13 Long-Term Liabilities
13.1 Bonds Payable 13-2
13.2 Extinguishment of Debt 13-17
13.3 Long-Term Notes Payable 13-19
13.4 Reporting and Analyzing Liabilities 13-28
Analytics in Action Helping to Put Debt into Perspective 13-34
Appendix 13A: Troubled-Debt Restructuring 13-34
14 Stockholdersâ Equity
14.1 Corporate Capital 14-2
14.2 Reacquisition of Shares 14-17
14.3 Dividend Policy 14-24
14.4 Presentation and Decision Analysis of Stockholdersâ Equity 14-36
Analytics in Action Track Those Ratios! 14-40
Appendix 14A: Dividend Preferences and Book Value per Share 14-40
15 Dilutive Securities and Earnings per Share
15.1 Dilutive Securities 15-2
15.2 Stock Warrants 15-7
15.3 Stock Compensation Plans 15-11
15.4 Basic Earnings per Share 15-23
15.5 Diluted Earnings per Share 15-28
Analytics in Action Earnings per Share versus Net Income 15-37
Appendix 15A: Accounting for Stock-Appreciation Rights 15-39
Appendix 15B: Comprehensive Earnings per Share Example 15-42
16 Investments
16.1 Investments in Debt Securities 16-1
16.2 Investments in Equity Securities 16-14
16.4 Other Financial Reporting Issues 16-23
Analytics in Action Risky Retirement 16-33
Appendix 16A: Accounting for Derivative Instruments 16-34
Appendix 16B: Fair Value Disclosures 16-50
17 Revenue Recognition
17.1 Fundamentals of Revenue Recognition 17-2
17.2 The Five-Step Process Revisited 17-6
17.3 Accounting for Revenue Recognition Issues 17-21
Analytics in Action Are You Going to Keep That? 17-23
17.4 Presentation and Disclosure 17-34
Appendix 17A: Long-Term Construction Contracts 17-39
Appendix 17B: Revenue Recognition for Franchises 17-51
18 Accounting for Income Taxes
18.1 Fundamentals of Accounting for Income Taxes 18-2
18.2 Additional Considerations 18-15
18.3 Accounting for Net Operating Losses 18-23
18.4 Financial Statement Presentation 18-30
Analytics in Action Visualizing Taxes 18-36
Appendix 18A: Comprehensive Example of Interperiod Tax Allocation 18-38
Appendix 18B: Accounting for Net Operating Loss Carrybacks 18-44
19 Accounting for Pensions and Postretirement Benefits
19.1 Fundamentals of Pension Plan Accounting 19-2
19.2 Using a Pension Worksheet 19-12
19.3 Prior Service Cost (PSC) 19-16
19.4 Gains and Losses 19-20
19.5 Reporting Pension Plans in Financial Statements 19-29
Analytics in Action Pension De-Risking 19-37
Appendix 19A: Accounting for Postretirement Benefits 19-39
20 Accounting for Leases
20.1 The Leasing Environment 20-2
20.2 Accounting for Finance Leases 20-12
20.3 Accounting for Operating Leases 20-22
20.4 Special Lease Accounting Problems 20-29
Appendix 20A: Sale-Leasebacks 20-41
Appendix 20B: Direct Financing Lease (Lessor) 20-45
21 Accounting Changes and Error Analysis
21.1 Accounting Changes 21-1
21.2 Other Accounting Changes 21-14
21.3 Accounting Errors 21-18
21.4 Error Analysis 21-25
Appendix 21A: Changing from or to the Equity Method 21-36
22 Statement of Cash Flows
22.1 Overview of Statement of Cash Flows 22-2
22.2 Preparing the Statement of Cash Flows 22-6
22.3 Net Cash Flow from Operating Activitiesâ"Direct Method 22-19
22.4 Special Problems in Statement Preparation 22-26
Analytics in Action Cash Flow Analysis 22-35
22.5 Use of a Worksheet 22-37
23 Full Disclosure in Financial Reporting
23.1 Full Disclosure Principle 23-2
23.2 Disclosure Issues 23-7
23.3 Auditorâs and Managementâs Reports 23-22
23.4 Current Reporting Issues 23-29
Appendix 23A: Basic Financial Statement Analysis 23-34
Appendix A Private Company Accounting A-1
A.1 The Private Company Council (PCC) A-1
A.2 Private Company Alternatives for Intangible Assets and Goodwill A-2
A.3 Summary A-6
Appendix B Specimen Financial Statements: The Procter & Gamble Company B-1
Appendix C Specimen Financial Statements: The Coca-Cola Company C-1
Appendix D Specimen Financial Statements: PepsiCo, Inc. D-1
Company Index
Subject Index
List of Accounts
