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Intermediate Accounting, Thirteenth Edition

Book Description

The bestselling book on intermediate accounting, Kieso is an excellent reference for practicing accountants and an invaluable resource for anyone entering the field. It integrates FARS/Codification exercises, cases, and simulations into the chapters. This introduces readers to the codification project. They'll learn how to leverage everyday accounting programs like Excel, GLS, and other computerized accounting software giving them a strong background in the tools needed in the accounting profession. New and existing content is arranged in a way to offer accountants a chance to review key concepts.

New to This Edition:

  • NEW IFRS content:Intermediate Accounting, 13e, includes, in 20 of the 24 chapters, a "Convergence Corner" feature that demonstrates to readers how international financial reporting standards apply to the main topics of the chapter.

    • Updated Appendix 24B provides a complete discussion of the international accounting and reporting environment, with the latest convergence developments.

    • Quick-hitting International Insights in the margins compare or contrast international standards with a point under discussion in the nearby text.

    • New end-of-chapter Questions in each chapter focus on international standards introduced in the chapter. These questions are marked with an icon for easy reference.

    • International Reporting Cases ask readers to analyze financial statements of international companies and apply analysis with the application of international standards.

  • Updated Fair Value discussions: Fair value has been expanded at both the introductory level in Chapter 2 and in subsequent chapters where appropriate. The more thorough discussion in Chapter 2 lays the groundwork for expanded discussions in later chapters. The result is a solid understanding of fair value in the accounting profession today.

  • FASB Codification: This edition integrates the new FASB Codification throughout. References to the accounting pronouncements replaced by a numbering system in each chapter linked to the new Codification. A list of Codification references at the end of each chapter links the bracketed numbers from the text to the Codification; this list also includes a reference to the preceding literature, for easing the transition to the new system. In addition, a handful of quick exercises in each chapter give readers opportunities for practice and simple research in the Codification.

  • Revised End-of-Chapter Material: Names, numbers, and dates in all end-of-chapter materials, including brief exercises and problems, have been changed.

  • Expanded CPA-prep Professional Simulations: Now be offering a complete online Wiley CPA prep course electronically.

  • Updated real-world focus: This edition contains many new chapter-opening stories and "What Do the Numbers Mean?" boxes. Such applications join theory and practice, and demonstrate to readers the use of accounting in today's business world.

Table of Contents

  1. Copyright
  2. ABOUT THE AUTHORS
  3. PREFACE
    1. THE ACCOUNTING ENVIRONMENT
      1. A New Way of Looking at Generally Accepted Principles (GAAP)
      2. Convergence of U.S. GAAP and International GAAP (iGAAP)
      3. A Fair Value Movement
    2. FEATURES OF THE 13TH EDITION
      1. Major Content Revisions
        1. Codification
        2. Underlying Concepts
        3. Convergence Corner/IFRS
      2. New Appendices
      3. Updated Supplements
    3. ENHANCED FEATURES OF THE 13TH EDITION
      1. What do the numbers mean? Real-World Emphasis
      2. Currency and Accuracy
      3. International Coverage
      4. Streamlined Presentation
      5. Additional Exercises
      6. Using Your Judgment Section
    4. CONTENT CHANGES
    5. END-OF-CHAPTER ASSIGNMENT MATERIAL
      1. WileyPLUS
      2. Book's Companion Website
      3. Content of the Gateway to the Profession Portal
        1. Analyst's Toolkit
        2. Professional Toolkit
        3. Student Toolkit
        4. Gateway to the Profession Topics
    6. SUPPLEMENTARY MATERIALS
      1. Instructor Teaching Aids
      2. Student Learning Aids
    7. ACKNOWLEDGMENTS
  4. Preface
    1. FASB Codification—The New View of Generally Accepted Accounting Principles
    2. Using the FASB Codification
    3. Using the FASB Codification in this Textbook
  5. 1. FINANCIAL ACCOUNTING AND ACCOUNTING STANDARDS
    1. 1.1. FINANCIAL STATEMENTS AND FINANCIAL REPORTING
      1. 1.1.1. Accounting and Capital Allocation
      2. 1.1.2. What do the numbers mean? IT'S THE ACCOUNTING
      3. 1.1.3. The Challenges Facing Financial Accounting
      4. 1.1.4. Objectives of Financial Reporting
      5. 1.1.5. The Need to Develop Standards
    2. 1.2. PARTIES INVOLVED IN STANDARD-SETTING
      1. 1.2.1. Securities and Exchange Commission (SEC)
        1. 1.2.1.1. Public/Private Partnership
        2. 1.2.1.2. SEC Oversight
        3. 1.2.1.3. Enforcement
      2. 1.2.2. American Institute of Certified Public Accountants (AICPA)
        1. 1.2.2.1. Committee on Accounting Procedure
        2. 1.2.2.2. Accounting Principles Board
      3. 1.2.3. Financial Accounting Standards Board (FASB)
        1. 1.2.3.1. Due Process
        2. 1.2.3.2. Types of Pronouncements
      4. 1.2.4. Changing Role of the AICPA
    3. 1.3. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
      1. 1.3.1. FASB Codification
      2. 1.3.2. What do the numbers mean? YOU HAVE TO STEP BACK
    4. 1.4. ISSUES IN FINANCIAL REPORTING
      1. 1.4.1. GAAP in a Political Environment
      2. 1.4.2. What do the numbers mean? THE ECONOMIC CONSEQUENCES OF GOODWILL
      3. 1.4.3. The Expectations Gap
      4. 1.4.4. International Accounting Standards
      5. 1.4.5. Ethics in the Environment of Financial Accounting
      6. 1.4.6. Conclusion
    5. 1.5. CONVERGENCE CORNER: INTERNATIONAL FINANCIAL REPORTING
      1. 1.5.1. RELEVANT FACTS
      2. 1.5.2. ABOUT THE NUMBERS
      3. 1.5.3. ON THE HORIZON
    6. 1.6. SUMMARY OF LEARNING OBJECTIVES
    7. 1.7. FASB CODIFICATION
    8. 1.8. QUESTIONS
    9. 1.9. CONCEPTS FOR ANALYSIS
    10. 1.10. USING YOUR JUDGMENT
      1. 1.10.1. FINANCIAL REPORTING
        1. 1.10.1.1. Financial Reporting Problem
        2. 1.10.1.2. International Reporting Case
      2. 1.10.2. BRIDGE TO THE PROFESSION
        1. 1.10.2.1. Professional Research
        2. 1.10.2.2. Professional Simulation
  6. 2. CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL ACCOUNTING
    1. 2.1. CONCEPTUAL FRAMEWORK
      1. 2.1.1. The Need for a Conceptual Framework
      2. 2.1.2. What do the numbers mean? WHAT'S YOUR PRINCIPLE?
      3. 2.1.3. Development of a Conceptual Framework
    2. 2.2. FIRST LEVEL: BASIC OBJECTIVES
    3. 2.3. SECOND LEVEL: FUNDAMENTAL CONCEPTS
      1. 2.3.1. Qualitative Characteristics of Accounting Information
        1. 2.3.1.1. Decision Makers (Users) and Understandability
        2. 2.3.1.2. Primary Qualities: Relevance and Reliability
      2. 2.3.2. What do the numbers mean? SHOW ME THE EARNINGS!
        1. 2.3.2.1. Secondary Qualities: Comparability and Consistency
      3. 2.3.3. Basic Elements
    4. 2.4. THIRD LEVEL: RECOGNITION AND MEASUREMENT CONCEPTS
      1. 2.4.1. Basic Assumptions
        1. 2.4.1.1. Economic Entity Assumption
      2. 2.4.2. What do the numbers mean? WHOSE COMPANY IS IT?
        1. 2.4.2.1. Going Concern Assumption
        2. 2.4.2.2. Monetary Unit Assumption
        3. 2.4.2.3. Periodicity Assumption
      3. 2.4.3. Basic Principles of Accounting
        1. 2.4.3.1. Measurement Principle
        2. 2.4.3.2. Revenue Recognition Principle
        3. 2.4.3.3. Expense Recognition Principle
        4. 2.4.3.4. Full Disclosure Principle
      4. 2.4.4. Constraints
      5. 2.4.5. What do the numbers mean? YOU MAY NEED A MAP
        1. 2.4.5.1. Cost-Benefit Relationship
        2. 2.4.5.2. Materiality
      6. 2.4.6. What do the numbers mean? LIVING IN A MATERIAL WORLD
        1. 2.4.6.1. Industry Practices
        2. 2.4.6.2. Conservatism
      7. 2.4.7. Summary of the Structure
    5. 2.5. CONVERGENCE CORNER: THE CONCEPTUAL FRAMEWORK
      1. 2.5.1. RELEVANT FACTS
      2. 2.5.2. ABOUT THE NUMBERS
      3. 2.5.3. ON THE HORIZON
    6. 2.6. SUMMARY OF LEARNING OBJECTIVES
    7. 2.7. FASB CODIFICATION
    8. 2.8. QUESTIONS
    9. 2.9. BRIEF EXERCISES
    10. 2.10. EXERCISES
    11. 2.11. CONCEPTS FOR ANALYSIS
    12. 2.12. USING YOUR JUDGMENT
      1. 2.12.1. FINANCIAL REPORTING
        1. 2.12.1.1. Financial Reporting Problem
          1. 2.12.1.1.1. The Procter & Gamble Company (P&G)
        2. 2.12.1.2. Comparative Analysis Case
          1. 2.12.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 2.12.1.3. Financial Statement Analysis Case
          1. 2.12.1.3.1. Wal-Mart
        4. 2.12.1.4. International Reporting Case
      2. 2.12.2. BRIDGE TO THE PROFESSION
        1. 2.12.2.1. Professional Research
        2. 2.12.2.2. Professional Simulation
  7. 3. THE ACCOUNTING INFORMATION SYSTEM
    1. 3.1. ACCOUNTING INFORMATION SYSTEM
      1. 3.1.1. Basic Terminology
      2. 3.1.2. Debits and Credits
      3. 3.1.3. The Accounting Equation
      4. 3.1.4. Financial Statements and Ownership Structure
    2. 3.2. THE ACCOUNTING CYCLE
      1. 3.2.1. Identifying and Recording Transactions and Other Events
      2. 3.2.2. Journalizing
      3. 3.2.3. Posting
      4. 3.2.4. Trial Balance
      5. 3.2.5. Adjusting Entries
        1. 3.2.5.1. Types of Adjusting Entries
        2. 3.2.5.2. Adjusting Entries for Deferrals
        3. 3.2.5.3. Adjusting Entries for Accruals
      6. 3.2.6. What do the numbers mean? AM I COVERED?
      7. 3.2.7. Adjusted Trial Balance
      8. 3.2.8. Preparing Financial Statements
      9. 3.2.9. What do the numbers mean? 24/7 ACCOUNTING
      10. 3.2.10. Closing
        1. 3.2.10.1. Basic Process
        2. 3.2.10.2. Closing Entries
        3. 3.2.10.3. Posting Closing Entries
      11. 3.2.11. Post-Closing Trial Balance
      12. 3.2.12. Reversing Entries
      13. 3.2.13. The Accounting Cycle Summarized
      14. 3.2.14. What do the numbers mean? STATEMENTS, PLEASE
    3. 3.3. FINANCIAL STATEMENTS FOR A MERCHANDISING COMPANY
      1. 3.3.1. Income Statement
      2. 3.3.2. Statement of Retained Earnings
      3. 3.3.3. Balance Sheet
      4. 3.3.4. Closing Entries
    4. 3.4. CONVERGENCE CORNER: ACCOUNTING INFORMATION SYSTEMS
      1. 3.4.1. RELEVANT FACTS
      2. 3.4.2. ABOUT THE NUMBERS
      3. 3.4.3. ON THE HORIZON
    5. 3.5. SUMMARY OF LEARNING OBJECTIVES
    6. 3A. CASH-BASIS ACCOUNTING VERSUS ACCRUAL-BASIS ACCOUNTING
    7. 3.7. CONVERSION FROM CASH BASIS TO ACCRUAL BASIS
      1. 3.7.1. Service Revenue Computation
      2. 3.7.2. Operating Expense Computation
    8. 3.8. THEORETICAL WEAKNESSES OF THE CASH BASIS
    9. 3.9. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 3A
    10. 3B. USING REVERSING ENTRIES
    11. 3.11. ILLUSTRATION OF REVERSING ENTRIES—ACCRUALS
    12. 3.12. ILLUSTRATION OF REVERSING ENTRIES—DEFERRALS
    13. 3.13. SUMMARY OF REVERSING ENTRIES
    14. 3.14. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 3B
    15. 3C. USING A WORKSHEET: THE ACCOUNTING CYCLE REVISITED
    16. 3.16. WORKSHEET COLUMNS
      1. 3.16.1. Trial Balance Columns
      2. 3.16.2. Adjustments Columns
    17. 3.17. ADJUSTMENTS ENTERED ON THE WORKSHEET
      1. 3.17.1. Adjusted Trial Balance
      2. 3.17.2. Income Statement and Balance Sheet Columns
    18. 3.18. PREPARING FINANCIAL STATEMENTS FROM A WORKSHEET
    19. 3.19. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 3C
    20. 3.20. QUESTIONS
    21. 3.21. BRIEF EXERCISES
    22. 3.22. EXERCISES
    23. 3.23. PROBLEMS
    24. 3.24. USING YOUR JUDGMENT
      1. 3.24.1. FINANCIAL REPORTING
        1. 3.24.1.1. Financial Reporting Problem
          1. 3.24.1.1.1. The Procter & Gamble Company (P&G)
        2. 3.24.1.2. Comparative Analysis Case
          1. 3.24.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 3.24.1.3. Financial Statement Analysis Case
          1. 3.24.1.3.1. Kellogg Company
      2. 3.24.2. BRIDGE TO THE PROFESSION
        1. 3.24.2.1. Professional Research
        2. 3.24.2.2. Professional Simulation
  8. 4. INCOME STATEMENT AND RELATED INFORMATION
    1. 4.1. INCOME STATEMENT
      1. 4.1.1. Usefulness of the Income Statement
      2. 4.1.2. Limitations of the Income Statement
      3. 4.1.3. Quality of Earnings
      4. 4.1.4. What do the numbers mean? MANAGE UP, MANAGE DOWN
    2. 4.2. FORMAT OF THE INCOME STATEMENT
      1. 4.2.1. Elements of the Income Statement
      2. 4.2.2. Single-Step Income Statements
      3. 4.2.3. Multiple-Step Income Statements
      4. 4.2.4. Condensed Income Statements
    3. 4.3. REPORTING IRREGULAR ITEMS
      1. 4.3.1. What do the numbers mean? ARE ONE-TIME CHARGES BUGGING YOU?
      2. 4.3.2. Discontinued Operations
      3. 4.3.3. Extraordinary Items
      4. 4.3.4. What do the numbers mean? EXTRAORDINARY TIMES
      5. 4.3.5. Unusual Gains and Losses
      6. 4.3.6. Changes in Accounting Principle
      7. 4.3.7. Changes in Estimates
      8. 4.3.8. Corrections of Errors
      9. 4.3.9. Summary of Irregular Items
    4. 4.4. SPECIAL REPORTING ISSUES
      1. 4.4.1. Intraperiod Tax Allocation
        1. 4.4.1.1. Extraordinary Gains
        2. 4.4.1.2. Extraordinary Losses
      2. 4.4.2. Earnings per Share
      3. 4.4.3. Retained Earnings Statement
        1. 4.4.3.1. Restrictions of Retained Earnings
      4. 4.4.4. Comprehensive Income
        1. 4.4.4.1. Second Income Statement
        2. 4.4.4.2. Combined Statement of Comprehensive Income
        3. 4.4.4.3. Statement of Stockholders' Equity
        4. 4.4.4.4. Balance Sheet Presentation
    5. 4.5. CONVERGENCE CORNER: INCOME STATEMENT
      1. 4.5.1. RELEVANT FACTS
      2. 4.5.2. ABOUT THE NUMBERS
      3. 4.5.3. ON THE HORIZON
    6. 4.6. SUMMARY OF LEARNING OBJECTIVES
    7. 4.7. FASB CODIFICATION
    8. 4.8. QUESTIONS
    9. 4.9. BRIEF EXERCISES
    10. 4.10. EXERCISES
    11. 4.11. PROBLEMS
    12. 4.12. CONCEPTS FOR ANALYSIS
    13. 4.13. USING YOUR JUDGMENT
      1. 4.13.1. FINANCIAL REPORTING
        1. 4.13.1.1. Financial Reporting Problem
          1. 4.13.1.1.1. The Procter & Gamble Company (P&G)
        2. 4.13.1.2. Comparative Analysis Case
          1. 4.13.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 4.13.1.3. Financial Statement Analysis Cases
          1. 4.13.1.3.1. Case 1 Bankruptcy Prediction
          2. 4.13.1.3.2. Case 2 Dresser Industries
          3. 4.13.1.3.3. Case 3 P/E Ratios
        4. 4.13.1.4. International Reporting Case
      2. 4.13.2. BRIDGE TO THE PROFESSION
        1. 4.13.2.1. Professional Research: FASB Codification
        2. 4.13.2.2. Professional Simulation
  9. 5. BALANCE SHEET AND STATEMENT OF CASH FLOWS
    1. 5.1. SECTION 1 • BALANCE SHEET
    2. 5.2. USEFULNESS OF THE BALANCE SHEET
      1. 5.2.1. What do the numbers mean? GROUNDED
    3. 5.3. LIMITATIONS OF THE BALANCE SHEET
    4. 5.4. CLASSIFICATION IN THE BALANCE SHEET
      1. 5.4.1. Current Assets
        1. 5.4.1.1. Cash
        2. 5.4.1.2. Short-Term Investments
        3. 5.4.1.3. Receivables
        4. 5.4.1.4. Inventories
        5. 5.4.1.5. Prepaid Expenses
      2. 5.4.2. Noncurrent Assets
        1. 5.4.2.1. Long-Term Investments
        2. 5.4.2.2. Property, Plant, and Equipment
        3. 5.4.2.3. Intangible Assets
        4. 5.4.2.4. Other Assets
      3. 5.4.3. Liabilities
        1. 5.4.3.1. Current Liabilities
      4. 5.4.4. What do the numbers mean? "SHOW ME THE ASSETS!"
        1. 5.4.4.1. Long-Term Liabilities
      5. 5.4.5. Owners' Equity
      6. 5.4.6. Balance Sheet Format
      7. 5.4.7. What do the numbers mean? WARNING SIGNALS
    5. 5.5. ADDITIONAL INFORMATION REPORTED
      1. 5.5.1. Contingencies
      2. 5.5.2. Accounting Policies
      3. 5.5.3. Contractual Situations
      4. 5.5.4. What do the numbers mean? WHAT ABOUT YOUR COMMITMENTS?
      5. 5.5.5. Fair Values
    6. 5.6. TECHNIQUES OF DISCLOSURE
      1. 5.6.1. Parenthetical Explanations
      2. 5.6.2. Notes
      3. 5.6.3. Cross-Reference and Contra Items
      4. 5.6.4. Supporting Schedules
      5. 5.6.5. Terminology
    7. 5.7. SECTION 2 • STATEMENT OF CASH FLOWS
    8. 5.8. PURPOSE OF THE STATEMENT OF CASH FLOWS
      1. 5.8.1. What do the numbers mean? WATCH THAT CASH FLOW
    9. 5.9. CONTENT AND FORMAT OF THE STATEMENT OF CASH FLOWS
    10. 5.10. OVERVIEW OF THE PREPARATION OF THE STATEMENT OF CASH FLOWS
      1. 5.10.1. Sources of Information
      2. 5.10.2. Preparing the Statement of Cash Flows
      3. 5.10.3. Significant Noncash Activities
    11. 5.11. USEFULNESS OF THE STATEMENT OF CASH FLOWS
      1. 5.11.1. What do the numbers mean? CASH IS KING?
      2. 5.11.2. Financial Liquidity
      3. 5.11.3. Financial Flexibility
      4. 5.11.4. Free Cash Flow
    12. 5.12. CONVERGENCE CORNER: BALANCE SHEET AND STATEMENT OF CASH FLOWS
      1. 5.12.1. RELEVANT FACTS
      2. 5.12.2. ABOUT THE NUMBERS
      3. 5.12.3. ON THE HORIZON
    13. 5.13. SUMMARY OF LEARNING OBJECTIVES
    14. 5A. RATIO ANALYSIS—A REFERENCE
    15. 5.15. USING RATIOS TO ANALYZE PERFORMANCE
    16. 5.16. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 5A
    17. 5B. SPECIMEN FINANCIAL STATEMENTS: THE PROCTER & GAMBLE COMPANY
      1. 5.17.1. Fellow Shareholders:
        1. 5.17.1.1. Management's Responsibility for Financial Reporting
        2. 5.17.1.2. Management's Report on Internal Control over Financial Reporting
        3. 5.17.1.3. Report of Independent Registered Public Accounting Firm
        4. 5.17.1.4. Report of Independent Registered Public Accounting Firm
        5. 5.17.1.5. Consolidated Statements of Earnings
        6. 5.17.1.6. Consolidated Balance Sheets
          1. 5.17.1.6.1. Assets
        7. 5.17.1.7. Consolidated Balance Sheets
          1. 5.17.1.7.1. Liabilities and Shareholders' Equity
        8. 5.17.1.8. Consolidated Statements of Shareholders' Equity
        9. 5.17.1.9. Consolidated Statements of Cash Flows
        10. 5.17.1.10. Notes to Consolidated Financial Statements
          1. 5.17.1.10.1. NOTE 1
          2. 5.17.1.10.2. NOTE 2
          3. 5.17.1.10.3. NOTE 3
          4. 5.17.1.10.4. NOTE 4
          5. 5.17.1.10.5. NOTE 5
          6. 5.17.1.10.6. NOTE 6
          7. 5.17.1.10.7. NOTE 7
          8. 5.17.1.10.8. NOTE 8
          9. 5.17.1.10.9. NOTE 9
          10. 5.17.1.10.10. NOTE 10
          11. 5.17.1.10.11. NOTE 11
          12. 5.17.1.10.12. NOTE 12
          13. 5.17.1.10.13. NOTE 12
        11. 5.17.1.11. Financial Summary (Unaudited)
        12. 5.17.1.12. Shareholder Return Performance Graphs
    18. 5.18. FASB CODIFICATION
    19. 5.19. QUESTIONS
    20. 5.20. BRIEF EXERCISES
    21. 5.21. EXERCISES
    22. 5.22. PROBLEMS
    23. 5.23. CONCEPTS FOR ANALYSIS
    24. 5.24. USING YOUR JUDGMENT
      1. 5.24.1. FINANCIAL REPORTING
        1. 5.24.1.1. Financial Reporting Problem
          1. 5.24.1.1.1. The Procter & Gamble Company (P&G)
        2. 5.24.1.2. Comparative Analysis Case
          1. 5.24.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 5.24.1.3. Financial Statement Analysis Cases
          1. 5.24.1.3.1. Case 1 Uniroyal Technology Corporation
          2. 5.24.1.3.2. Case 2 Sherwin-Williams Company
          3. 5.24.1.3.3. Case 3 Deere & Company
          4. 5.24.1.3.4. Case 4 Amazon.com
        4. 5.24.1.4. International Reporting Case
      2. 5.24.2. BRIDGE TO THE PROFESSION
        1. 5.24.2.1. Professional Research: FASB Codification
        2. 5.24.2.2. Professional Simulation
  10. 6. ACCOUNTING AND THE TIME VALUE OF MONEY
    1. 6.1. BASIC TIME VALUE CONCEPTS
      1. 6.1.1. Applications of Time Value Concepts
      2. 6.1.2. The Nature of Interest
      3. 6.1.3. Simple Interest
      4. 6.1.4. Compound Interest
      5. 6.1.5. What do the numbers mean? A PRETTY GOOD START
        1. 6.1.5.1. Compound Interest Tables (see pages 308–317)
      6. 6.1.6. Fundamental Variables
    2. 6.2. SINGLE-SUM PROBLEMS
      1. 6.2.1. Future Value of a Single Sum
      2. 6.2.2. Present Value of a Single Sum
      3. 6.2.3. Solving for Other Unknowns in Single-Sum Problems
        1. 6.2.3.1. Example—Computation of the Number of Periods
        2. 6.2.3.2. Example—Computation of the Interest Rate
    3. 6.3. ANNUITIES
      1. 6.3.1. Future Value of an Ordinary Annuity
      2. 6.3.2. Future Value of an Annuity Due
      3. 6.3.3. Examples of Future Value of Annuity Problems
        1. 6.3.3.1. Computation of Rent
        2. 6.3.3.2. Computation of the Number of Periodic Rents
        3. 6.3.3.3. Computation of the Future Value
      4. 6.3.4. Present Value of an Ordinary Annuity
      5. 6.3.5. What do the numbers mean? UP IN SMOKE
      6. 6.3.6. Present Value of an Annuity Due
      7. 6.3.7. Examples of Present Value of Annuity Problems
        1. 6.3.7.1. Computation of the Present Value of an Ordinary Annuity
        2. 6.3.7.2. Computation of the Interest Rate
        3. 6.3.7.3. Computation of a Periodic Rent
    4. 6.4. MORE COMPLEX SITUATIONS
      1. 6.4.1. Deferred Annuities
        1. 6.4.1.1. Future Value of a Deferred Annuity
        2. 6.4.1.2. Present Value of a Deferred Annuity
      2. 6.4.2. Valuation of Long-Term Bonds
      3. 6.4.3. Effective-Interest Method of Amortization of Bond Discount or Premium
    5. 6.5. PRESENT VALUE MEASUREMENT
      1. 6.5.1. What do the numbers mean? HOW LOW CAN THEY GO?
      2. 6.5.2. Choosing an Appropriate Interest Rate
      3. 6.5.3. Example of Expected Cash Flow
    6. 6.6. SUMMARY OF LEARNING OBJECTIVES
    7. 6.7. FASB CODIFICATION
    8. 6.8. QUESTIONS
    9. 6.9. BRIEF EXERCISES
    10. 6.10. EXERCISES
    11. 6.11. PROBLEMS
    12. 6.12. USING YOUR JUDGMENT
      1. 6.12.1. FINANCIAL REPORTING
        1. 6.12.1.1. Financial Reporting Problem
          1. 6.12.1.1.1. The Procter & Gamble Company (P&G)
        2. 6.12.1.2. Financial Statement Analysis Case
          1. 6.12.1.2.1. Consolidated Natural Gas Company
      2. 6.12.2. BRIDGE TO THE PROFESSION
        1. 6.12.2.1. Professional Research
        2. 6.12.2.2. Professional Simulation
  11. 7. CASH AND RECEIVABLES
    1. 7.1. SECTION 1 • CASH
    2. 7.2. WHAT IS CASH?
    3. 7.3. REPORTING CASH
      1. 7.3.1. Cash Equivalents
      2. 7.3.2. Restricted Cash
      3. 7.3.3. Bank Overdrafts
    4. 7.4. SUMMARY OF CASH-RELATED ITEMS
      1. 7.4.1. What do the numbers mean? PILING UP CASH
    5. 7.5. SECTION 2 • RECEIVABLES
    6. 7.6. RECOGNITION OF ACCOUNTS RECEIVABLE
      1. 7.6.1. Trade Discounts
      2. 7.6.2. Cash Discounts (Sales Discounts)
      3. 7.6.3. Nonrecognition of Interest Element
    7. 7.7. VALUATION OF ACCOUNTS RECEIVABLE
      1. 7.7.1. Uncollectible Accounts Receivable
        1. 7.7.1.1. Percentage-of-Sales (Income Statement) Approach
        2. 7.7.1.2. Percentage-of-Receivables (Balance Sheet) Approach
      2. 7.7.2. What do the numbers mean? "TOO GENEROUS"?
        1. 7.7.2.1. Collection of Accounts Receivable Written Off
      3. 7.7.3. What do the numbers mean? COLLECTION IS A CLICK AWAY
    8. 7.8. RECOGNITION OF NOTES RECEIVABLE
      1. 7.8.1. Note Issued at Face Value
      2. 7.8.2. Note Not Issued at Face Value
        1. 7.8.2.1. Zero-Interest-Bearing Notes
        2. 7.8.2.2. Interest-Bearing Notes
        3. 7.8.2.3. Notes Received for Property, Goods, or Services
      3. 7.8.3. Choice of Interest Rate
    9. 7.9. VALUATION OF NOTES RECEIVABLE
      1. 7.9.1. What do the numbers mean? ECONOMIC CONSEQUENCES AND WRITE-OFFS
    10. 7.10. DISPOSITION OF ACCOUNTS AND NOTES RECEIVABLE
      1. 7.10.1. Secured Borrowing
      2. 7.10.2. Sales of Receivables
        1. 7.10.2.1. Sale without Recourse
        2. 7.10.2.2. Sale with Recourse
      3. 7.10.3. Secured Borrowing versus Sale
      4. 7.10.4. What do the numbers mean? RETURN TO LENDER
    11. 7.11. PRESENTATION AND ANALYSIS
      1. 7.11.1. Presentation of Receivables
      2. 7.11.2. Analysis of Receivables
        1. 7.11.2.1. Receivables Turnover Ratio
    12. 7.12. CONVERGENCE CORNER: CASH AND RECEIVABLES
      1. 7.12.1. RELEVANT FACTS
      2. 7.12.2. ABOUT THE NUMBERS
      3. 7.12.3. ON THE HORIZON
    13. 7.13. SUMMARY OF LEARNING OBJECTIVES
    14. 7A. CASH CONTROLS
    15. 7.15. USING BANK ACCOUNTS
    16. 7.16. THE IMPREST PETTY CASH SYSTEM
    17. 7.17. PHYSICAL PROTECTION OF CASH BALANCES
    18. 7.18. RECONCILIATION OF BANK BALANCES
      1. 7.18.1. What do the numbers mean? BOUNCE A CHECK, GET BANNED
    19. 7.19. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 7A
    20. 7B. IMPAIRMENTS OF RECEIVABLES
    21. 7.21. BACKGROUND
    22. 7.22. IMPAIRMENT MEASUREMENT AND REPORTING
      1. 7.22.1. Impairment Loss Example
      2. 7.22.2. Recording Impairment Losses
      3. 7.22.3. What do the numbers mean? LOST IN TRANSLATION
    23. 7.23. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 7B
    24. 7.24. FASB CODIFICATION
    25. 7.25. QUESTIONS
    26. 7.26. BRIEF EXERCISES
    27. 7.27. EXERCISES
    28. 7.28. PROBLEMS
    29. 7.29. CONCEPTS FOR ANALYSIS
    30. 7.30. USING YOUR JUDGMENT
      1. 7.30.1. FINANCIAL REPORTING
        1. 7.30.1.1. Financial Reporting Problem
          1. 7.30.1.1.1. The Procter & Gamble Company (P&G)
        2. 7.30.1.2. Comparative Analysis Case
          1. 7.30.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 7.30.1.3. Financial Statement Analysis Cases
          1. 7.30.1.3.1. Case I Occidental Petroleum Corporation
          2. 7.30.1.3.2. Case 2 Microsoft Corporation
          3. 7.30.1.3.3. Part 1 (Cash and Cash Equivalents)
          4. 7.30.1.3.4. Part 2 (Accounts Receivables)
      2. 7.30.2. BRIDGE TO THE PROFESSION
        1. 7.30.2.1. Professional Research: FASB Codification
        2. 7.30.2.2. Professional Simulation
  12. 8. VALUATION OF INVENTORIES: A COST-BASIS APPROACH
    1. 8.1. INVENTORY ISSUES
      1. 8.1.1. Classification
      2. 8.1.2. Inventory Cost Flow
        1. 8.1.2.1. Perpetual System
        2. 8.1.2.2. Periodic System
        3. 8.1.2.3. Comparing Perpetual and Periodic Systems
      3. 8.1.3. Inventory Control
      4. 8.1.4. What do the numbers mean? STAYING LEAN
    2. 8.2. BASIC ISSUES IN INVENTORY VALUATION
    3. 8.3. PHYSICAL GOODS INCLUDED IN INVENTORY
      1. 8.3.1. Goods in Transit
      2. 8.3.2. Consigned Goods
      3. 8.3.3. Special Sales Agreements
        1. 8.3.3.1. Sales with Buyback Agreement
        2. 8.3.3.2. Sales with High Rates of Return
        3. 8.3.3.3. Sales on Installment
      4. 8.3.4. What do the numbers mean? NO PARKING!
      5. 8.3.5. Effect of Inventory Errors
        1. 8.3.5.1. Ending Inventory Misstated
        2. 8.3.5.2. Purchases and Inventory Misstated
    4. 8.4. COSTS INCLUDED IN INVENTORY
      1. 8.4.1. Product Costs
      2. 8.4.2. Period Costs
      3. 8.4.3. Treatment of Purchase Discounts
      4. 8.4.4. What do the numbers mean? YOU MAY NEED A MAP
    5. 8.5. WHICH COST FLOW ASSUMPTION TO ADOPT?
      1. 8.5.1. Specific Identification
      2. 8.5.2. Average Cost
      3. 8.5.3. First-In, First-Out (FIFO)
      4. 8.5.4. Last-In, First-Out (LIFO)
    6. 8.6. SPECIAL ISSUES RELATED TO LIFO
      1. 8.6.1. LIFO Reserve
      2. 8.6.2. What do the numbers mean? COMPARING APPLES TO APPLES
      3. 8.6.3. LIFO Liquidation
      4. 8.6.4. Dollar-Value LIFO
        1. 8.6.4.1. Dollar-Value LIFO Example
        2. 8.6.4.2. Comprehensive Dollar-Value LIFO Example
        3. 8.6.4.3. Selecting a Price Index
      5. 8.6.5. What do the numbers mean? QUITE A DIFFERENCE
      6. 8.6.6. Comparison of LIFO Approaches
      7. 8.6.7. Major Advantages of LIFO
        1. 8.6.7.1. Matching
        2. 8.6.7.2. Tax Benefits/Improved Cash Flow
        3. 8.6.7.3. Future Earnings Hedge
      8. 8.6.8. Major Disadvantages of LIFO
        1. 8.6.8.1. Reduced Earnings
        2. 8.6.8.2. Inventory Understated
        3. 8.6.8.3. Physical Flow
        4. 8.6.8.4. Involuntary Liquidation/Poor Buying Habits
    7. 8.7. BASIS FOR SELECTION OF INVENTORY METHOD
      1. 8.7.1. Inventory Valuation Methods—Summary Analysis
    8. 8.8. SUMMARY OF LEARNING OBJECTIVES
    9. 8.9. FASB CODIFICATION
    10. 8.10. QUESTIONS
    11. 8.11. BRIEF EXERCISES
    12. 8.12. EXERCISES
    13. 8.13. PROBLEMS
    14. 8.14. CONCEPTS FOR ANALYSIS
    15. 8.15. USING YOUR JUDGMENT
      1. 8.15.1. FINANCIAL REPORTING
        1. 8.15.1.1. Financial Statement Analysis Cases
          1. 8.15.1.1.1. Case 1 T J International
          2. 8.15.1.1.2. Case 2 Noven Pharmaceuticals, Inc.
          3. 8.15.1.1.3. Case 3 SUPERVALU
      2. 8.15.2. BRIDGE TO THE PROFESSION
        1. 8.15.2.1. Professional Research: FASB Codification
        2. 8.15.2.2. Professional Simulation
  13. 9. INVENTORIES: ADDITIONAL VALUATION ISSUES
    1. 9.1. LOWER-OF-COST-OR-MARKET
      1. 9.1.1. Ceiling and Floor
      2. 9.1.2. How Lower-of-Cost-or-Market Works
      3. 9.1.3. Methods of Applying Lower-of-Cost-or-Market
      4. 9.1.4. Recording "Market" Instead of Cost
      5. 9.1.5. What do the numbers mean? "PUT IT IN REVERSE"
      6. 9.1.6. Evaluation of the Lower-of-Cost-or-Market Rule
    2. 9.2. VALUATION BASES
      1. 9.2.1. Valuation at Net Realizable Value
      2. 9.2.2. Valuation Using Relative Sales Value
      3. 9.2.3. Purchase Commitments—A Special Problem
    3. 9.3. THE GROSS PROFIT METHOD OF ESTIMATING INVENTORY
      1. 9.3.1. Computation of Gross Profit Percentage
      2. 9.3.2. Evaluation of Gross Profit Method
      3. 9.3.3. What do the numbers mean? THE SQUEEZE
    4. 9.4. RETAIL INVENTORY METHOD
      1. 9.4.1. Retail-Method Concepts
      2. 9.4.2. Retail Inventory Method with Markups and Markdowns—Conventional Method
      3. 9.4.3. Special Items Relating to Retail Method
      4. 9.4.4. Evaluation of Retail Inventory Method
    5. 9.5. PRESENTATION AND ANALYSIS
      1. 9.5.1. Presentation of Inventories
      2. 9.5.2. Analysis of Inventories
        1. 9.5.2.1. Inventory Turnover Ratio
        2. 9.5.2.2. Average Days to Sell Inventory
    6. 9.6. CONVERGENCE CORNER: INVENTORIES
      1. 9.6.1. RELEVANT FACTS
      2. 9.6.2. ABOUT THE NUMBERS
      3. 9.6.3. ON THE HORIZON
    7. 9.7. SUMMARY OF LEARNING OBJECTIVES
    8. 9A. LIFO RETAIL METHODS
    9. 9.9. STABLE PRICES—LIFO RETAIL METHOD
    10. 9.10. FLUCTUATING PRICES—DOLLAR-VALUE LIFO RETAIL METHOD
    11. 9.11. SUBSEQUENT ADJUSTMENTS UNDER DOLLAR-VALUE LIFO RETAIL
    12. 9.12. CHANGING FROM CONVENTIONAL RETAIL TO LIFO
    13. 9.13. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 9A
    14. 9.14. FASB CODIFICATION
    15. 9.15. QUESTIONS
    16. 9.16. BRIEF EXERCISES
    17. 9.17. EXERCISES
    18. 9.18. PROBLEMS
    19. 9.19. CONCEPTS FOR ANALYSIS
    20. 9.20. USING YOUR JUDGMENT
      1. 9.20.1. FINANCIAL REPORTING
        1. 9.20.1.1. Financial Reporting Problem
          1. 9.20.1.1.1. The Procter & Gamble Company (P&G)
        2. 9.20.1.2. Comparative Analysis Case
          1. 9.20.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 9.20.1.3. Financial Statement Analysis Cases
          1. 9.20.1.3.1. Case 1 Prab Robots, Inc.
          2. 9.20.1.3.2. Case 2 Barrick Gold Corporation
      2. 9.20.2. BRIDGE TO THE PROFESSION
        1. 9.20.2.1. Professional Research: FASB Codification
        2. 9.20.2.2. Professional Simulation
  14. 10. ACQUISITION AND DISPOSITION OF PROPERTY, PLANT, AND EQUIPMENT
    1. 10.1. PROPERTY, PLANT, AND EQUIPMENT
    2. 10.2. ACQUISITION OF PROPERTY, PLANT, AND EQUIPMENT
      1. 10.2.1. Cost of Land
      2. 10.2.2. Cost of Buildings
      3. 10.2.3. Cost of Equipment
      4. 10.2.4. Self-Constructed Assets
      5. 10.2.5. Interest Costs During Construction
        1. 10.2.5.1. Qualifying Assets
        2. 10.2.5.2. Capitalization Period
        3. 10.2.5.3. Amount to Capitalize
        4. 10.2.5.4. Comprehensive Example of Interest Capitalization
        5. 10.2.5.5. Special Issues Related to Interest Capitalization
      6. 10.2.6. Observations
      7. 10.2.7. What do the numbers mean? WHAT'S IN YOUR INTEREST?
    3. 10.3. VALUATION OF PROPERTY, PLANT, AND EQUIPMENT
      1. 10.3.1. Cash Discounts
      2. 10.3.2. Deferred-Payment Contracts
      3. 10.3.3. Lump-Sum Purchases
      4. 10.3.4. Issuance of Stock
      5. 10.3.5. Exchanges of Nonmonetary Assets
        1. 10.3.5.1. Meaning of Commercial Substance
        2. 10.3.5.2. Exchanges—Loss Situation
        3. 10.3.5.3. Exchanges—Gain Situation
      6. 10.3.6. What do the numbers mean? ABOUT THOSE SWAPS
      7. 10.3.7. Accounting for Contributions
      8. 10.3.8. Other Asset Valuation Methods
    4. 10.4. COSTS SUBSEQUENT TO ACQUISITION
      1. 10.4.1. What do the numbers mean? DISCONNECTED
      2. 10.4.2. Additions
      3. 10.4.3. Improvements and Replacements
      4. 10.4.4. Rearrangement and Reinstallation
      5. 10.4.5. Repairs
      6. 10.4.6. Summary of Costs Subsequent to Acquisition
    5. 10.5. DISPOSITION OF PROPERTY, PLANT, AND EQUIPMENT
      1. 10.5.1. Sale of Plant Assets
      2. 10.5.2. Involuntary Conversion
      3. 10.5.3. Miscellaneous Problems
    6. 10.6. SUMMARY OF LEARNING OBJECTIVES
    7. 10.7. FASB CODIFICATION
    8. 10.8. QUESTIONS
    9. 10.9. BRIEF EXERCISES
    10. 10.10. EXERCISES
    11. 10.11. PROBLEMS
    12. 10.12. CONCEPTS FOR ANALYSIS
    13. 10.13. USING YOUR JUDGMENT
      1. 10.13.1. FINANCIAL REPORTING
        1. 10.13.1.1. Financial Statement Analysis Case
          1. 10.13.1.1.1. Johnson & Johnson
      2. 10.13.2. BRIDGE TO THE PROFESSION
        1. 10.13.2.1. Professional Research: FASB Codification
        2. 10.13.2.2. Professional Simulation
  15. 11. DEPRECIATION, IMPAIRMENTS, AND DEPLETION
    1. 11.1. DEPRECIATION—A METHOD OF COST ALLOCATION
      1. 11.1.1. Factors Involved in the Depreciation Process
        1. 11.1.1.1. Depreciable Base for the Asset
        2. 11.1.1.2. Estimation of Service Lives
      2. 11.1.2. What do the numbers mean? ALPHABET DUPE
      3. 11.1.3. Methods of Depreciation
        1. 11.1.3.1. Activity Method
        2. 11.1.3.2. Straight-Line Method
        3. 11.1.3.3. Decreasing-Charge Methods
      4. 11.1.4. Special Depreciation Methods
        1. 11.1.4.1. Group and Composite Methods
        2. 11.1.4.2. Hybrid or Combination Methods
      5. 11.1.5. What do the numbers mean? DECELERATING DEPRECIATION
      6. 11.1.6. Special Depreciation Issues
        1. 11.1.6.1. Depreciation and Partial Periods
        2. 11.1.6.2. Depreciation and Replacement of Fixed Assets
        3. 11.1.6.3. Revision of Depreciation Rates
      7. 11.1.7. What do the numbers mean? DEPRECIATION CHOICES
    2. 11.2. IMPAIRMENTS
      1. 11.2.1. Recognizing Impairments
      2. 11.2.2. Measuring Impairments
        1. 11.2.2.1. Impairment—Example 1
        2. 11.2.2.2. Impairment—Example 2
      3. 11.2.3. Restoration of Impairment Loss
      4. 11.2.4. Impairment of Assets to Be Disposed Of
    3. 11.3. DEPLETION
      1. 11.3.1. Establishing a Depletion Base
        1. 11.3.1.1. Acquisition Costs
        2. 11.3.1.2. Exploration Costs
        3. 11.3.1.3. Development Costs
        4. 11.3.1.4. Restoration Costs
      2. 11.3.2. Write-Off of Resource Cost
      3. 11.3.3. Estimating Recoverable Reserves
      4. 11.3.4. What do the numbers mean? RAH-RAH SURPRISE
      5. 11.3.5. Liquidating Dividends
      6. 11.3.6. Continuing Controversy
    4. 11.4. PRESENTATION AND ANALYSIS
      1. 11.4.1. Presentation of Property, Plant, Equipment, and Natural Resources
      2. 11.4.2. Analysis of Property, Plant, and Equipment
        1. 11.4.2.1. Asset Turnover Ratio
        2. 11.4.2.2. Profit Margin on Sales Ratio
        3. 11.4.2.3. Rate of Return on Assets
    5. 11.5. CONVERGENCE CORNER: PROPERTY, PLANT, AND EQUIPMENT
      1. 11.5.1. RELEVANT FACTS
      2. 11.5.2. ABOUT THE NUMBERS
      3. 11.5.3. ON THE HORIZON
    6. 11.6. SUMMARY OF LEARNING OBJECTIVES
    7. 11A. INCOME TAX DEPRECIATION
    8. 11.8. MODIFIED ACCELERATED COST RECOVERY SYSTEM
      1. 11.8.1. Tax Lives (Recovery Periods)
      2. 11.8.2. Tax Depreciation Methods
      3. 11.8.3. Example of MACRS System
    9. 11.9. OPTIONAL STRAIGHT-LINE METHOD
    10. 11.10. TAX VERSUS BOOK DEPRECIATION
    11. 11.11. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 11A
    12. 11.12. FASB CODIFICATION
    13. 11.13. QUESTIONS
    14. 11.14. BRIEF EXERCISES
    15. 11.15. EXERCISES
    16. 11.16. PROBLEMS
    17. 11.17. CONCEPTS FOR ANALYSIS
    18. 11.18. USING YOUR JUDGMENT
      1. 11.18.1. FINANCIAL REPORTING
        1. 11.18.1.1. Financial Reporting Problem
          1. 11.18.1.1.1. The Procter & Gamble Company (P&G)
        2. 11.18.1.2. Comparative Analysis Case
          1. 11.18.1.2.1. The Coca-Cola Company and PepsiCo., Inc.
        3. 11.18.1.3. Financial Statement Analysis Case
          1. 11.18.1.3.1. McDonald's Corporation
        4. 11.18.1.4. International Reporting Case
      2. 11.18.2. BRIDGE TO THE PROFESSION
        1. 11.18.2.1. Professional Research: FASB Codification
        2. 11.18.2.2. Professional Simulation
  16. 12. INTANGIBLE ASSETS
    1. 12.1. INTANGIBLE ASSET ISSUES
      1. 12.1.1. Characteristics
      2. 12.1.2. Valuation
        1. 12.1.2.1. Purchased Intangibles
        2. 12.1.2.2. Internally Created Intangibles
      3. 12.1.3. Amortization of Intangibles
        1. 12.1.3.1. Limited-Life Intangibles
        2. 12.1.3.2. Indefinite-Life Intangibles
      4. 12.1.4. What do the numbers mean? DEFINITELY INDEFINITE
    2. 12.2. TYPES OF INTANGIBLE ASSETS
      1. 12.2.1. Marketing-Related Intangible Assets
      2. 12.2.2. Customer-Related Intangible Assets
      3. 12.2.3. Artistic-Related Intangible Assets
      4. 12.2.4. Contract-Related Intangible Assets
      5. 12.2.5. Technology-Related Intangible Assets
      6. 12.2.6. What do the numbers mean? PATENT BATTLES
      7. 12.2.7. What do the numbers mean? THE VALUE OF A SECRET FORMULA
      8. 12.2.8. Goodwill
        1. 12.2.8.1. Recording Goodwill
        2. 12.2.8.2. Goodwill Write-off
        3. 12.2.8.3. Bargain Purchase
    3. 12.3. IMPAIRMENT OF INTANGIBLE ASSETS
      1. 12.3.1. Impairment of Limited-Life Intangibles
      2. 12.3.2. Impairment of Indefinite-Life Intangibles Other Than Goodwill
      3. 12.3.3. Impairment of Goodwill
      4. 12.3.4. Impairment Summary
      5. 12.3.5. What do the numbers mean? WHAT? ME IMPAIRED?
    4. 12.4. RESEARCH AND DEVELOPMENT COSTS
      1. 12.4.1. Identifying R&D Activities
      2. 12.4.2. Accounting for R&D Activities
      3. 12.4.3. Costs Similar to R&D Costs
        1. 12.4.3.1. Start-Up Costs
        2. 12.4.3.2. Initial Operating Losses
        3. 12.4.3.3. Advertising Costs
      4. 12.4.4. What do the numbers mean? BRANDED
        1. 12.4.4.1. Computer Software Costs
      5. 12.4.5. Conceptual Questions
    5. 12.5. PRESENTATION OF INTANGIBLES AND RELATED ITEMS
      1. 12.5.1. Presentation of Intangible Assets
      2. 12.5.2. Presentation of Research and Development Costs
    6. 12.6. CONVERGENCE CORNER: INTANGIBLE ASSETS
      1. 12.6.1. RELEVANT FACTS
      2. 12.6.2. ABOUT THE NUMBERS
      3. 12.6.3. ON THE HORIZON
    7. 12.7. SUMMARY OF LEARNING OBJECTIVES
    8. 12A. ACCOUNTING FOR COMPUTER SOFTWARE COSTS
    9. 12.9. DIVERSITY IN PRACTICE
    10. 12.10. THE PROFESSION'S POSITION
    11. 12.11. ACCOUNTING FOR CAPITALIZED SOFTWARE COSTS
    12. 12.12. REPORTING SOFTWARE COSTS
    13. 12.13. SETTING STANDARDS FOR SOFTWARE ACCOUNTING
    14. 12.14. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 12A
    15. 12.15. FASB CODIFICATION
    16. 12.16. QUESTIONS
    17. 12.17. BRIEF EXERCISES
    18. 12.18. EXERCISES
    19. 12.19. PROBLEMS
    20. 12.20. CONCEPTS FOR ANALYSIS
    21. 12.21. USING YOUR JUDGMENT
      1. 12.21.1. FINANCIAL REPORTING
        1. 12.21.1.1. Financial Reporting Problem
          1. 12.21.1.1.1. The Procter & Gamble Company (P&G)
        2. 12.21.1.2. Comparative Analysis Case
          1. 12.21.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 12.21.1.3. Financial Statement Analysis Cases
          1. 12.21.1.3.1. Case 1: Merck and Johnson & Johnson
          2. 12.21.1.3.2. Case 2: Analysis of Goodwill
        4. 12.21.1.4. International Reporting Case
          1. 12.21.1.4.1. Bayer, Glaxo SmithKline, and Merck
        5. 12.21.1.5. BRIDGE TO THE PROFESSION
          1. 12.21.1.5.1. Professional Research: FASB Codification
        6. 12.21.1.6. Professional Simulation
  17. 13. CURRENT LIABILITIES AND CONTINGENCIES
    1. 13.1. SECTION 1 • CURRENT LIABILITIES
    2. 13.2. WHAT IS A LIABILITY?
    3. 13.3. WHAT IS A CURRENT LIABILITY?
      1. 13.3.1. Accounts Payable
      2. 13.3.2. Notes Payable
        1. 13.3.2.1. Interest-Bearing Note Issued
        2. 13.3.2.2. Zero-Interest-Bearing Note Issued
      3. 13.3.3. Current Maturities of Long-Term Debt
      4. 13.3.4. Short-Term Obligations Expected to Be Refinanced
        1. 13.3.4.1. Refinancing Criteria
      5. 13.3.5. What do the numbers mean? WHAT ABOUT THAT SHORT-TERM DEBT?
      6. 13.3.6. Dividends Payable
      7. 13.3.7. Customer Advances and Deposits
      8. 13.3.8. Unearned Revenues
      9. 13.3.9. What do the numbers mean? MICROSOFT'S LIABILITIES—GOOD OR BAD?
      10. 13.3.10. Sales Taxes Payable
      11. 13.3.11. Income Taxes Payable
      12. 13.3.12. Employee-Related Liabilities
        1. 13.3.12.1. Payroll Deductions
        2. 13.3.12.2. Compensated Absences
        3. 13.3.12.3. Bonus Agreements
    4. 13.4. SECTION 2 • CONTINGENCIES
    5. 13.5. GAIN CONTINGENCIES
    6. 13.6. LOSS CONTINGENCIES
      1. 13.6.1. Likelihood of Loss
      2. 13.6.2. Litigation, Claims, and Assessments
      3. 13.6.3. Guarantee and Warranty Costs
        1. 13.6.3.1. Cash Basis
        2. 13.6.3.2. Accrual Basis
      4. 13.6.4. Premiums and Coupons
      5. 13.6.5. What do the numbers mean? FREQUENT FLYERS
      6. 13.6.6. Environmental Liabilities
        1. 13.6.6.1. Accounting Recognition of Asset Retirement Obligations
      7. 13.6.7. What do the numbers mean? MORE DISCLOSURE, PLEASE
      8. 13.6.8. Self-Insurance
    7. 13.7. SECTION 3 • PRESENTATION AND ANALYSIS
    8. 13.8. PRESENTATION OF CURRENT LIABILITIES
    9. 13.9. PRESENTATION OF CONTINGENCIES
    10. 13.10. ANALYSIS OF CURRENT LIABILITIES
      1. 13.10.1. Current Ratio
      2. 13.10.2. Acid-Test Ratio
    11. 13.11. SUMMARY OF LEARNING OBJECTIVES
    12. 13.12. FASB CODIFICATION
    13. 13.13. QUESTIONS
    14. 13.14. BRIEF EXERCISES
    15. 13.15. EXERCISES
    16. 13.16. PROBLEMS
    17. 13.17. CONCEPTS FOR ANALYSIS
    18. 13.18. USING YOUR JUDGMENT
      1. 13.18.1. FINANCIAL REPORTING
        1. 13.18.1.1. Financial Reporting Problem
          1. 13.18.1.1.1. The Procter & Gamble Company (P&G)
        2. 13.18.1.2. Comparative Analysis Case
          1. 13.18.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 13.18.1.3. Financial Statement Analysis Cases
          1. 13.18.1.3.1. Case 1 Northland Cranberries
          2. 13.18.1.3.2. Case 2 Mohican Company
          3. 13.18.1.3.3. Case 3 BOP Clothing Co.
      2. 13.18.2. BRIDGE TO THE PROFESSION
        1. 13.18.2.1. Professional Research: FASB Codification
        2. 13.18.2.2. Professional Simulation
  18. 14. LONG-TERM LIABILITIES
    1. 14.1. SECTION 1 • BONDS PAYABLE
    2. 14.2. ISSUING BONDS
    3. 14.3. TYPES AND RATINGS OF BONDS
      1. 14.3.1. What do the numbers mean? ALL ABOUT BONDS
    4. 14.4. VALUATION OF BONDS PAYABLE—DISCOUNT AND PREMIUM
      1. 14.4.1. What do the numbers mean? HOW'S MY RATING?
      2. 14.4.2. Bonds Issued at Par on Interest Date
      3. 14.4.3. Bonds Issued at Discount or Premium on Interest Date
      4. 14.4.4. Bonds Issued Between Interest Dates
    5. 14.5. EFFECTIVE-INTEREST METHOD
      1. 14.5.1. Bonds Issued at a Discount
      2. 14.5.2. Bonds Issued at a Premium
      3. 14.5.3. Accruing Interest
      4. 14.5.4. Classification of Discount and Premium
    6. 14.6. COSTS OF ISSUING BONDS
    7. 14.7. EXTINGUISHMENT OF DEBT
      1. 14.7.1. What do the numbers mean? DEAD-WEIGHT DEBT
    8. 14.8. SECTION 2 • LONG-TERM NOTES PAYABLE
    9. 14.9. NOTES ISSUED AT FACE VALUE
    10. 14.10. NOTES NOT ISSUED AT FACE VALUE
      1. 14.10.1. Zero-Interest-Bearing Notes
      2. 14.10.2. Interest-Bearing Notes
    11. 14.11. SPECIAL NOTES PAYABLE SITUATIONS
      1. 14.11.1. Notes Issued for Property, Goods, or Services
      2. 14.11.2. Choice of Interest Rate
    12. 14.12. MORTGAGE NOTES PAYABLE
    13. 14.13. SECTION 3 • REPORTING AND ANALYZING LONG-TERM DEBT
    14. 14.14. OFF-BALANCE-SHEET FINANCING
      1. 14.14.1. Different Forms
      2. 14.14.2. Rationale
      3. 14.14.3. What do the numbers mean? OBLIGATED
    15. 14.15. PRESENTATION AND ANALYSIS OF LONG-TERM DEBT
      1. 14.15.1. Presentation of Long-Term Debt
      2. 14.15.2. Analysis of Long-Term Debt
        1. 14.15.2.1. Debt to Total Assets Ratio
        2. 14.15.2.2. Times Interest Earned Ratio
    16. 14.16. CONVERGENCE CORNER: LIABILITIES
      1. 14.16.1. RELEVANT FACTS
      2. 14.16.2. ABOUT THE NUMBERS
      3. 14.16.3. ON THE HORIZON
    17. 14.17. SUMMARY OF LEARNING OBJECTIVES
    18. 14A. TROUBLED-DEBT RESTRUCTURINGS
    19. 14.19. SETTLEMENT OF DEBT
      1. 14.19.1. Transfer of Assets
      2. 14.19.2. Granting of Equity Interest
    20. 14.20. MODIFICATION OF TERMS
      1. 14.20.1. Example 1—No Gain for Debtor
        1. 14.20.1.1. Debtor Calculations
        2. 14.20.1.2. Creditor Calculations
      2. 14.20.2. Example 2—Gain for Debtor
    21. 14.21. CONCLUDING REMARKS
    22. 14.22. SUMMARY OF LEARNING OBJECTIVE
    23. 14.23. FASB CODIFICATION
    24. 14.24. QUESTIONS
    25. 14.25. BRIEF EXERCISES
    26. 14.26. EXERCISES
    27. 14.27. PROBLEMS
    28. 14.28. CONCEPTS FOR ANALYSIS
    29. 14.29. USING YOUR JUDGMENT
      1. 14.29.1. FINANCIAL REPORTING PROBLEM
        1. 14.29.1.1. The Procter & Gamble Company (P&G)
      2. 14.29.2. Comparative Analysis Case
        1. 14.29.2.1. The Coca-Cola Company and PepsiCo, Inc.
        2. 14.29.2.2. Financial Statement Analysis Cases
          1. 14.29.2.2.1. Case 1 Commonwealth Edison Co.
        3. 14.29.2.3. Case 2 PepsiCo, Inc.
      3. 14.29.3. BRIDGE TO THE PROFESSION
        1. 14.29.3.1. Professional Research: FASB Codification
        2. 14.29.3.2. Professional Simulation
  19. 15. STOCKHOLDERS' EQUITY
    1. 15.1. THE CORPORATE FORM OF ORGANIZATION
      1. 15.1.1. State Corporate Law
      2. 15.1.2. Capital Stock or Share System
      3. 15.1.3. Variety of Ownership Interests
      4. 15.1.4. What do the numbers mean? A CLASS (B) ACT
    2. 15.2. CORPORATE CAPITAL
      1. 15.2.1. Issuance of Stock
        1. 15.2.1.1. Par Value Stock
        2. 15.2.1.2. No-Par Stock
        3. 15.2.1.3. Stock Issued with Other Securities (Lump-Sum Sales)
        4. 15.2.1.4. Stock Issued in Noncash Transactions
        5. 15.2.1.5. Costs of Issuing Stock
      2. 15.2.2. What do the numbers mean? THE CASE OF THE DISAPPEARING RECEIVABLE
      3. 15.2.3. Reacquisition of Shares
      4. 15.2.4. What do the numbers mean? SIGNALS TO BUY?
        1. 15.2.4.1. Purchase of Treasury Stock
        2. 15.2.4.2. Sale of Treasury Stock
        3. 15.2.4.3. Retiring Treasury Stock
    3. 15.3. PREFERRED STOCK
      1. 15.3.1. Features of Preferred Stock
        1. 15.3.1.1. Cumulative Preferred Stock
        2. 15.3.1.2. Participating Preferred Stock
        3. 15.3.1.3. Convertible Preferred Stock
        4. 15.3.1.4. Callable Preferred Stock
        5. 15.3.1.5. Redeemable Preferred Stock
      2. 15.3.2. Accounting for and Reporting Preferred Stock
    4. 15.4. DIVIDEND POLICY
      1. 15.4.1. Financial Condition and Dividend Distributions
      2. 15.4.2. Types of Dividends
        1. 15.4.2.1. Cash Dividends
        2. 15.4.2.2. Property Dividends
        3. 15.4.2.3. Liquidating Dividends
        4. 15.4.2.4. Stock Dividends
      3. 15.4.3. Stock Split
      4. 15.4.4. What do the numbers mean? SPLITSVILLE
        1. 15.4.4.1. Stock Split and Stock Dividend Differentiated
      5. 15.4.5. Disclosure of Restrictions on Retained Earnings
    5. 15.5. PRESENTATION AND ANALYSIS OF STOCKHOLDERS' EQUITY
      1. 15.5.1. Presentation
        1. 15.5.1.1. Balance Sheet
        2. 15.5.1.2. Statement of Stockholders' Equity
      2. 15.5.2. Analysis
        1. 15.5.2.1. Rate of Return on Common Stock Equity
        2. 15.5.2.2. Payout Ratio
        3. 15.5.2.3. Book Value per Share
    6. 15.6. CONVERGENCE CORNER: STOCKHOLDERS' EQUITY
      1. 15.6.1. RELEVANT FACTS
      2. 15.6.2. ABOUT THE NUMBERS
      3. 15.6.3. ON THE HORIZON
    7. 15.7. SUMMARY OF LEARNING OBJECTIVES
    8. 15A. DIVIDEND PREFERENCES AND BOOK VALUE PER SHARE
    9. 15.9. DIVIDEND PREFERENCES
    10. 15.10. BOOK VALUE PER SHARE
    11. 15.11. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 15A
    12. 15.12. FASB CODIFICATION
    13. 15.13. QUESTIONS
    14. 15.14. BRIEF EXERCISES
    15. 15.15. EXERCISES
    16. 15.16. PROBLEMS
    17. 15.17. CONCEPTS FOR ANALYSIS
    18. 15.18. USING YOUR JUDGMENT
      1. 15.18.1. FINANCIAL REPORTING
        1. 15.18.1.1. Financial Reporting Problem
          1. 15.18.1.1.1. The Procter & Gamble Company (P&G)
        2. 15.18.1.2. Comparative Analysis Case
          1. 15.18.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 15.18.1.3. Financial Statement Analysis Case
          1. 15.18.1.3.1. Case 1 Kellogg Company
          2. 15.18.1.3.2. Case 2 Wiebold, Incorporated
      2. 15.18.2. BRIDGE TO THE PROFESSION
        1. 15.18.2.1. Professional Research: FASB Codification
      3. 15.18.3. Professional Simulation
  20. 16. DILUTIVE SECURITIES AND EARNINGS PER SHARE
    1. 16.1. SECTION 1 • DILUTIVE SECURITIES AND COMPENSATION PLANS
    2. 16.2. DEBT AND EQUITY
    3. 16.3. ACCOUNTING FOR CONVERTIBLE DEBT
      1. 16.3.1. At Time of Issuance
      2. 16.3.2. At Time of Conversion
      3. 16.3.3. Induced Conversions
      4. 16.3.4. Retirement of Convertible Debt
    4. 16.4. CONVERTIBLE PREFERRED STOCK
      1. 16.4.1. What do the numbers mean? HOW LOW CAN YOU GO?
    5. 16.5. STOCK WARRANTS
      1. 16.5.1. Stock Warrants Issued with Other Securities
        1. 16.5.1.1. Proportional Method
        2. 16.5.1.2. Incremental Method
      2. 16.5.2. Conceptual Questions
      3. 16.5.3. Rights to Subscribe to Additional Shares
      4. 16.5.4. Stock Compensation Plans
        1. 16.5.4.1. The Major Reporting Issue
    6. 16.6. ACCOUNTING FOR STOCK COMPENSATION
      1. 16.6.1. Stock-Option Plans
        1. 16.6.1.1. Determining Expense
        2. 16.6.1.2. Allocating Compensation Expense
        3. 16.6.1.3. Stock Compensation Example
      2. 16.6.2. Restricted Stock
        1. 16.6.2.1. Restricted Stock Example
      3. 16.6.3. Employee Stock-Purchase Plans
      4. 16.6.4. Disclosure of Compensation Plans
      5. 16.6.5. Debate over Stock-Option Accounting
      6. 16.6.6. What do the numbers mean? A LITTLE HONESTY GOES A LONG WAY
    7. 16.7. SECTION 2 • COMPUTING EARNINGS PER SHARE
    8. 16.8. EARNINGS PER SHARE—SIMPLE CAPITAL STRUCTURE
      1. 16.8.1. Preferred Stock Dividends
      2. 16.8.2. Weighted-Average Number of Shares Outstanding
        1. 16.8.2.1. Stock Dividends and Stock Splits
      3. 16.8.3. Comprehensive Example
    9. 16.9. EARNINGS PER SHARE—COMPLEX CAPITAL STRUCTURE
      1. 16.9.1. Diluted EPS—Convertible Securities
        1. 16.9.1.1. Comprehensive Example—If-Converted Method
        2. 16.9.1.2. Other Factors
      2. 16.9.2. Diluted EPS—Options and Warrants
        1. 16.9.2.1. Comprehensive Example—Treasury-Stock Method
      3. 16.9.3. Contingent Issue Agreement
      4. 16.9.4. Antidilution Revisited
      5. 16.9.5. EPS Presentation and Disclosure
      6. 16.9.6. What do the numbers mean? PRO FORMA EPS CONFUSION
      7. 16.9.7. Summary of EPS Computation
    10. 16.10. CONVERGENCE CORNER: DILUTIVE SECURITIES AND EARNINGS PER SHARE
      1. 16.10.1. RELEVANT FACTS
      2. 16.10.2. ABOUT THE NUMBERS
      3. 16.10.3. ON THE HORIZON
    11. 16.11. SUMMARY OF LEARNING OBJECTIVES
    12. 16A. ACCOUNTING FOR STOCK-APPRECIATION RIGHTS
    13. 16.13. SARS—SHARE-BASED EQUITY AWARDS
    14. 16.14. SARS—SHARE-BASED LIABILITY AWARDS
    15. 16.15. STOCK-APPRECIATION RIGHTS EXAMPLE
    16. 16.16. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 16A
    17. 16B. COMPREHENSIVE EARNINGS PER SHARE EXAMPLE
    18. 16.18. DILUTED EARNINGS PER SHARE
    19. 16.19. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 16B
    20. 16.20. FASB CODIFICATION
    21. 16.21. QUESTIONS
    22. 16.22. BRIEF EXERCISES
    23. 16.23. EXERCISES
    24. 16.24. PROBLEMS
    25. 16.25. CONCEPTS FOR ANALYSIS
    26. 16.26. USING YOUR JUDGMENT
      1. 16.26.1. FINANCIAL REPORTING
        1. 16.26.1.1. Financial Reporting Problem
          1. 16.26.1.1.1. The Procter & Gamble Company (P&G)
        2. 16.26.1.2. Comparative Analysis Case
          1. 16.26.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 16.26.1.3. Financial Statement Analysis Case
          1. 16.26.1.3.1. Kellogg Company
        4. 16.26.1.4. International Reporting Case
      2. 16.26.2. BRIDGE TO THE PROFESSION
        1. 16.26.2.1. Professional Research: FASB Codification
        2. 16.26.2.2. Professional Simulation
  21. 17. INVESTMENTS
    1. 17.1. INVESTMENT ACCOUNTING APPROACHES
    2. 17.2. SECTION 1 • INVESTMENTS IN DEBT SECURITIES
    3. 17.3. HELD-TO-MATURITY SECURITIES
    4. 17.4. AVAILABLE-FOR-SALE SECURITIES
      1. 17.4.1. Example: Single Security
      2. 17.4.2. Example: Portfolio of Securities
      3. 17.4.3. Sale of Available-for-Sale Securities
      4. 17.4.4. Financial Statement Presentation
      5. 17.4.5. What do the numbers mean? WHAT IS FAIR VALUE?
    5. 17.5. TRADING SECURITIES
    6. 17.6. SECTION 2 • INVESTMENTS IN EQUITY SECURITIES
    7. 17.7. HOLDINGS OF LESS THAN 20%
      1. 17.7.1. Available-for-Sale Securities
      2. 17.7.2. Trading Securities
    8. 17.8. HOLDINGS BETWEEN 20% AND 50%
      1. 17.8.1. Equity Method
        1. 17.8.1.1. Investee Losses Exceed Carrying Amount
    9. 17.9. HOLDINGS OF MORE THAN 50%
      1. 17.9.1. What do the numbers mean? CONSOLIDATE THIS!
    10. 17.10. FAIR VALUE OPTION
      1. 17.10.1. Available-for-Sale Securities
      2. 17.10.2. Equity Method of Accounting
      3. 17.10.3. Financial Liabilities
    11. 17.11. SECTION 3 • OTHER REPORTING ISSUES
    12. 17.12. IMPAIRMENT OF VALUE
    13. 17.13. RECLASSIFICATION ADJUSTMENTS
      1. 17.13.1. Comprehensive Example
    14. 17.14. TRANSFERS BETWEEN CATEGORIES
    15. 17.15. FAIR VALUE CONTROVERSY
      1. 17.15.1. Measurement Based on Intent
      2. 17.15.2. Gains Trading
      3. 17.15.3. Liabilities Not Fairly Valued
      4. 17.15.4. Fair Values—Final Comment
    16. 17.16. SUMMARY OF REPORTING TREATMENT OF SECURITIES
      1. 17.16.1. What do the numbers mean? MORE DISCLOSURE, PLEASE
    17. 17.17. CONVERGENCE CORNER: INVESTMENTS
      1. 17.17.1. RELEVANT FACTS
      2. 17.17.2. ABOUT THE NUMBERS
      3. 17.17.3. ON THE HORIZON
    18. 17.18. SUMMARY OF LEARNING OBJECTIVES
    19. 17A. ACCOUNTING FOR DERIVATIVE INSTRUMENTS
    20. 17.20. DEFINING DERIVATIVES
    21. 17.21. WHO USES DERIVATIVES, AND WHY?
      1. 17.21.1. Producers and Consumers
      2. 17.21.2. Speculators and Arbitrageurs
    22. 17.22. BASIC PRINCIPLES IN ACCOUNTING FOR DERIVATIVES
      1. 17.22.1. Example of Derivative Financial Instrument—Speculation
      2. 17.22.2. Differences between Traditional and Derivative Financial Instruments
    23. 17.23. DERIVATIVES USED FOR HEDGING
      1. 17.23.1. What do the numbers mean? RISKY BUSINESS
      2. 17.23.2. Fair Value Hedge
      3. 17.23.3. Cash Flow Hedge
    24. 17.24. OTHER REPORTING ISSUES
      1. 17.24.1. Embedded Derivatives
      2. 17.24.2. Qualifying Hedge Criteria
      3. 17.24.3. Summary of Derivatives Accounting
    25. 17.25. COMPREHENSIVE HEDGE ACCOUNTING EXAMPLE
      1. 17.25.1. Fair Value Hedge
      2. 17.25.2. Financial Statement Presentation of an Interest Rate Swap
    26. 17.26. CONTROVERSY AND CONCLUDING REMARKS
    27. 17.27. SUMMARY OF LEARNING OBJECTIVES FOR APPENDIX 17A
    28. 17B. VARIABLE-INTEREST ENTITIES
    29. 17.29. WHAT ABOUT GAAP?
    30. 17.30. CONSOLIDATION OF VARIABLE-INTEREST ENTITIES
      1. 17.30.1. Some Examples
        1. 17.30.1.1. Example 1
        2. 17.30.1.2. Example 2
      2. 17.30.2. What Is Happening in Practice?
    31. 17.31. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 17B
    32. 17C. FAIR VALUE MEASUREMENTS AND DISCLOSURES
    33. 17.33. DISCLOSURE OF FAIR VALUE INFORMATION: FINANCIAL INSTRUMENTS—NO FAIR VALUE OPTION
    34. 17.34. DISCLOSURE OF FAIR VALUE INFORMATION: FINANCIAL INSTRUMENTS—FAIR VALUE OPTION
    35. 17.35. DISCLOSURE OF FAIR VALUES: IMPAIRED ASSETS OR LIABILITIES
    36. 17.36. FASB CODIFICATION
    37. 17.37. QUESTIONS
    38. 17.38. BRIEF EXERCISES
    39. 17.39. EXERCISES
    40. 17.40. PROBLEMS
    41. 17.41. CONCEPTS FOR ANALYSIS
    42. 17.42. USING YOUR JUDGMENT
      1. 17.42.1. FINANCIAL REPORTING
        1. 17.42.1.1. Financial Reporting Problem
          1. 17.42.1.1.1. The Procter & Gamble Company (P&G)
        2. 17.42.1.2. Comparative Analysis Case
          1. 17.42.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 17.42.1.3. Financial Statement Analysis Case
          1. 17.42.1.3.1. Union Planters
      2. 17.42.2. BRIDGE TO THE PROFESSION
        1. 17.42.2.1. Professional Research: FASB Codification
        2. 17.42.2.2. Professional Simulation
  22. 18. REVENUE RECOGNITION
    1. 18.1. THE CURRENT ENVIRONMENT
      1. 18.1.1. What do the numbers mean? GROSSED OUT
      2. 18.1.2. Guidelines for Revenue Recognition
      3. 18.1.3. Departures from the Sale Basis
    2. 18.2. REVENUE RECOGNITION AT POINT OF SALE (DELIVERY)
      1. 18.2.1. Sales with Buyback Agreements
      2. 18.2.2. Sales When Right of Return Exists
      3. 18.2.3. Trade Loading and Channel Stuffing
      4. 18.2.4. What do the numbers mean? NO TAKE-BACKS
    3. 18.3. REVENUE RECOGNITION BEFORE DELIVERY
      1. 18.3.1. Percentage-of-Completion Method
        1. 18.3.1.1. Measuring the Progress toward Completion
        2. 18.3.1.2. Example of Percentage-of-Completion Method—Cost-to-Cost Basis
        3. 18.3.1.3. Financial Statement Presentation—Percentage-of-Completion
      2. 18.3.2. Completed-Contract Method
      3. 18.3.3. Long-Term Contract Losses
      4. 18.3.4. Loss in Current Period
        1. 18.3.4.1. Loss on an Unprofitable Contract
      5. 18.3.5. Disclosures in Financial Statements
      6. 18.3.6. What do the numbers mean? LESS CONSERVATIVE
      7. 18.3.7. Completion-of-Production Basis
    4. 18.4. REVENUE RECOGNITION AFTER DELIVERY
      1. 18.4.1. Installment-Sales Method
        1. 18.4.1.1. Acceptability of the Installment-Sales Method
        2. 18.4.1.2. Procedure for Deferring Revenue and Cost of Sales of Merchandise
        3. 18.4.1.3. Additional Problems of Installment-Sales Accounting
        4. 18.4.1.4. Financial Statement Presentation of Installment-Sales Transactions
      2. 18.4.2. Cost-Recovery Method
      3. 18.4.3. What do the numbers mean? LIABILITY OR REVENUE?
      4. 18.4.4. Deposit Method
      5. 18.4.5. Summary of Product Revenue Recognition Bases
    5. 18.5. CONCLUDING REMARKS
    6. 18.6. CONVERGENCE CORNER: REVENUE RECOGNITION
      1. 18.6.1. RELEVANT FACTS
      2. 18.6.2. ABOUT THE NUMBERS
      3. 18.6.3. ON THE HORIZON
    7. 18.7. SUMMARY OF LEARNING OBJECTIVES
    8. 18A. REVENUE RECOGNITION FOR SPECIAL SALES TRANSACTIONS
    9. 18.9. FRANCHISES
      1. 18.9.1. Initial Franchise Fees
        1. 18.9.1.1. Example of Entries for Initial Franchise Fee
      2. 18.9.2. Continuing Franchise Fees
      3. 18.9.3. Bargain Purchases
      4. 18.9.4. Options to Purchase
      5. 18.9.5. Franchisor's Cost
      6. 18.9.6. Disclosures of Franchisors
    10. 18.10. CONSIGNMENTS
    11. 18.11. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 18A
    12. 18.12. FASB CODIFICATION
    13. 18.13. QUESTIONS
    14. 18.14. BRIEF EXERCISES
    15. 18.15. EXERCISES
    16. 18.16. PROBLEMS
    17. 18.17. CONCEPTS FOR ANALYSIS
    18. 18.18. USING YOUR JUDGMENT
      1. 18.18.1. FINANCIAL REPORTING
        1. 18.18.1.1. Financial Reporting Problem
          1. 18.18.1.1.1. The Procter & Gamble Company (P&G)
        2. 18.18.1.2. Comparative Analysis Case
          1. 18.18.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 18.18.1.3. Financial Statement Analysis Case
          1. 18.18.1.3.1. Westinghouse Electric Corporation
      2. 18.18.2. BRIDGE TO THE PROFESSION
        1. 18.18.2.1. Professional Research: FASB Codification
      3. 18.18.3. Professional Simulation
  23. 19. ACCOUNTING FOR INCOME TAXES
    1. 19.1. FUNDAMENTALS OF ACCOUNTING FOR INCOME TAXES
      1. 19.1.1. Future Taxable Amounts and Deferred Taxes
        1. 19.1.1.1. Deferred Tax Liability
      2. 19.1.2. What do the numbers mean? "REAL LIABILITIES"
        1. 19.1.2.1. Summary of Income Tax Accounting Objectives
      3. 19.1.3. Future Deductible Amounts and Deferred Taxes
        1. 19.1.3.1. Deferred Tax Asset
      4. 19.1.4. What do the numbers mean? "REAL ASSETS"
        1. 19.1.4.1. Deferred Tax Asset—Valuation Allowance
      5. 19.1.5. Income Statement Presentation
      6. 19.1.6. Specific Differences
        1. 19.1.6.1. Temporary Differences
        2. 19.1.6.2. Permanent Differences
        3. 19.1.6.3. Examples of Temporary and Permanent Differences
      7. 19.1.7. Tax Rate Considerations
        1. 19.1.7.1. Future Tax Rates
        2. 19.1.7.2. Revision of Future Tax Rates
      8. 19.1.8. What do the numbers mean? SHELTERED
    2. 19.2. ACCOUNTING FOR NET OPERATING LOSSES
      1. 19.2.1. Loss Carryback
      2. 19.2.2. Loss Carryforward
      3. 19.2.3. Loss Carryback Example
      4. 19.2.4. Loss Carryforward Example
        1. 19.2.4.1. Carryforward without Valuation Allowance
        2. 19.2.4.2. Carryforward with Valuation Allowance
        3. 19.2.4.3. Valuation Allowance Revisited
      5. 19.2.5. What do the numbers mean? READ THOSE NOTES
    3. 19.3. FINANCIAL STATEMENT PRESENTATION
      1. 19.3.1. Balance Sheet
      2. 19.3.2. Income Statement
      3. 19.3.3. What do the numbers mean? NOLs: GOOD NEWS OR BAD?
      4. 19.3.4. Uncertain Tax Positions
    4. 19.4. REVIEW OF THE ASSET-LIABILITY METHOD
    5. 19.5. CONVERGENCE CORNER: INCOME TAXES
      1. 19.5.1. RELEVANT FACTS
      2. 19.5.2. ABOUT THE NUMBERS
      3. 19.5.3. ON THE HORIZON
    6. 19.6. SUMMARY OF LEARNING OBJECTIVES
    7. 19A. COMPREHENSIVE EXAMPLE OF INTERPERIOD TAX ALLOCATION
    8. 19.8. FIRST YEAR—2009
      1. 19.8.1. Taxable Income and Income Tax Payable—2009
      2. 19.8.2. Computing Deferred Income Taxes—End of 2009
      3. 19.8.3. Deferred Tax Expense (Benefit) and the Journal Entry to Record Income Taxes—2009
      4. 19.8.4. Financial Statement Presentation—2009
    9. 19.9. SECOND YEAR—2010
      1. 19.9.1. Taxable Income and Income Tax Payable—2010
      2. 19.9.2. Computing Deferred Income Taxes—End of 2010
      3. 19.9.3. Deferred Tax Expense (Benefit) and the Journal Entry to Record Income Taxes—2010
      4. 19.9.4. Financial Statement Presentation—2010
    10. 19.10. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 19A
    11. 19.11. FASB CODIFICATION
    12. 19.12. QUESTIONS
    13. 19.13. BRIEF EXERCISES
    14. 19.14. EXERCISES
    15. 19.15. PROBLEMS
    16. 19.16. CONCEPTS FOR ANALYSIS
    17. 19.17. USING YOUR JUDGMENT
      1. 19.17.1. FINANCIAL REPORTING
        1. 19.17.1.1. Financial Reporting Problem
          1. 19.17.1.1.1. The Procter & Gamble Company (P&G)
        2. 19.17.1.2. Comparative Analysis Case
          1. 19.17.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 19.17.1.3. Financial Statement Analysis Case
          1. 19.17.1.3.1. Homestake Mining Company
      2. 19.17.2. BRIDGE TO THE PROFESSION
        1. 19.17.2.1. Professional Research: FASB Codification
        2. 19.17.2.2. Professional Simulation
  24. 20. ACCOUNTING FOR PENSIONS AND POSTRETIREMENT BENEFITS
    1. 20.1. NATURE OF PENSION PLANS
      1. 20.1.1. Defined-Contribution Plan
      2. 20.1.2. Defined-Benefit Plan
      3. 20.1.3. What do the numbers mean? WHICH PLAN IS RIGHT FOR YOU?
      4. 20.1.4. The Role of Actuaries in Pension Accounting
    2. 20.2. ACCOUNTING FOR PENSIONS
      1. 20.2.1. Alternative Measures of the Liability
      2. 20.2.2. Recognition of the Net Funded Status of the Pension Plan
      3. 20.2.3. Components of Pension Expense
        1. 20.2.3.1. Service Cost
        2. 20.2.3.2. Interest on the Liability
        3. 20.2.3.3. Actual Return on Plan Assets
    3. 20.3. USING A PENSION WORKSHEET
      1. 20.3.1. 2010 Entries and Worksheet
      2. 20.3.2. Amortization of Prior Service Cost (PSC)
      3. 20.3.3. 2011 Entries and Worksheet
      4. 20.3.4. Gain or Loss
        1. 20.3.4.1. Smoothing Unexpected Gains and Losses on Plan Assets
      5. 20.3.5. What do the numbers mean? PENSION COSTS UPS AND DOWNS
        1. 20.3.5.1. Smoothing Unexpected Gains and Losses on the Pension Liability
        2. 20.3.5.2. Corridor Amortization
        3. 20.3.5.3. Example of Gains/Losses
        4. 20.3.5.4. Summary of Calculations for Asset Gain or Loss
      6. 20.3.6. 2012 Entries and Worksheet
      7. 20.3.7. What do the numbers mean? BOUNCING BACK
    4. 20.4. REPORTING PENSION PLANS IN FINANCIAL STATEMENTS
      1. 20.4.1. Within the Financial Statements
        1. 20.4.1.1. Recognition of the Net Funded Status of the Pension Plan
        2. 20.4.1.2. Classification of Pension Asset or Pension Liability
        3. 20.4.1.3. Aggregation of Pension Plans
        4. 20.4.1.4. Actuarial Gains and Losses/Prior Service Cost
      2. 20.4.2. Within the Notes to the Financial Statements
      3. 20.4.3. Example of Pension Note Disclosure
        1. 20.4.3.1. Components of Pension Expense
        2. 20.4.3.2. Funded Status of Plan
      4. 20.4.4. 2013 Entries and Worksheet—A Comprehensive Example
        1. 20.4.4.1. Worksheet Explanations and Entries
        2. 20.4.4.2. Note Disclosure
      5. 20.4.5. Special Issues
        1. 20.4.5.1. The Pension Reform Act of 1974
        2. 20.4.5.2. Pension Terminations
      6. 20.4.6. What do the numbers mean? BAILING OUT
      7. 20.4.7. Concluding Observations
    5. 20.5. CONVERGENCE CORNER: POSTRETIREMENT BENEFITS
      1. 20.5.1. RELEVANT FACTS
      2. 20.5.2. ABOUT THE NUMBERS
      3. 20.5.3. ON THE HORIZON
    6. 20.6. SUMMARY OF LEARNING OBJECTIVES
    7. 20A. ACCOUNTING FOR POSTRETIREMENT BENEFITS
    8. 20.8. ACCOUNTING GUIDANCE
    9. 20.9. DIFFERENCES BETWEEN PENSION BENEFITS AND HEALTHCARE BENEFITS
      1. 20.9.1. What do the numbers mean? OPEBs—HOW BIG ARE THEY?
    10. 20.10. POSTRETIREMENT BENEFITS ACCOUNTING PROVISIONS
      1. 20.10.1. Obligations Under Postretirement Benefits
      2. 20.10.2. Postretirement Expense
    11. 20.11. ILLUSTRATIVE ACCOUNTING ENTRIES
      1. 20.11.1. 2010 Entries and Worksheet
      2. 20.11.2. Recognition of Gains and Losses
        1. 20.11.2.1. The Corridor Approach
        2. 20.11.2.2. Amortization Methods
      3. 20.11.3. 2011 Entries and Worksheet
      4. 20.11.4. Amortization of Net Gain or Loss in 2012
    12. 20.12. DISCLOSURES IN NOTES TO THE FINANCIAL STATEMENTS
    13. 20.13. ACTUARIAL ASSUMPTIONS AND CONCEPTUAL ISSUES
      1. 20.13.1. What do the numbers mean? GASB WHO?
    14. 20.14. SUMMARY OF LEARNING OBJECTIVES FOR APPENDIX 20A
    15. 20.15. FASB CODIFICATION
    16. 20.16. QUESTIONS
    17. 20.17. BRIEF EXERCISES
    18. 20.18. EXERCISES
    19. 20.19. PROBLEMS
    20. 20.20. CONCEPTS FOR ANALYSIS
    21. 20.21. USING YOUR JUDGMENT
      1. 20.21.1. FINANCIAL REPORTING
        1. 20.21.1.1. Financial Reporting Problem
          1. 20.21.1.1.1. The Procter & Gamble Company (P&G)
        2. 20.21.1.2. Comparative Analysis Case
          1. 20.21.1.2.1. The Coca-Cola Company versus PepsiCo, Inc.
        3. 20.21.1.3. *Financial Statement Analysis Case
          1. 20.21.1.3.1. General Electric
        4. 20.21.1.4. International Reporting Case
      2. 20.21.2. BRIDGE TO THE PROFESSION
        1. 20.21.2.1. Professional Research: FASB Codification
        2. 20.21.2.2. Professional Simulation
  25. 21. ACCOUNTING FOR LEASES
    1. 21.1. THE LEASING ENVIRONMENT
      1. 21.1.1. Who Are the Players?
        1. 21.1.1.1. Banks
        2. 21.1.1.2. Captive Leasing Companies
        3. 21.1.1.3. Independents
      2. 21.1.2. Advantages of Leasing
      3. 21.1.3. What do the numbers mean? OFF–BALANCE-SHEET FINANCING
      4. 21.1.4. Conceptual Nature of a Lease
    2. 21.2. ACCOUNTING BY THE LESSEE
      1. 21.2.1. Capitalization Criteria
        1. 21.2.1.1. Transfer of Ownership Test
        2. 21.2.1.2. Bargain-Purchase Option Test
        3. 21.2.1.3. Economic Life Test (75% Test)
        4. 21.2.1.4. Recovery of Investment Test (90% Test)
      2. 21.2.2. Asset and Liability Accounted for Differently
        1. 21.2.2.1. Asset and Liability Recorded
        2. 21.2.2.2. Depreciation Period
        3. 21.2.2.3. Effective-Interest Method
        4. 21.2.2.4. Depreciation Concept
      3. 21.2.3. Capital Lease Method (Lessee)
      4. 21.2.4. Operating Method (Lessee)
      5. 21.2.5. Comparison of Capital Lease with Operating Lease
      6. 21.2.6. What do the numbers mean? ARE YOU LIABLE?
    3. 21.3. ACCOUNTING BY THE LESSOR
      1. 21.3.1. Economics of Leasing
      2. 21.3.2. Classification of Leases by the Lessor
      3. 21.3.3. Direct-Financing Method (Lessor)
      4. 21.3.4. Operating Method (Lessor)
    4. 21.4. SPECIAL ACCOUNTING PROBLEMS
      1. 21.4.1. Residual Values
        1. 21.4.1.1. Meaning of Residual Value
        2. 21.4.1.2. Guaranteed versus Unguaranteed
        3. 21.4.1.3. Lease Payments
        4. 21.4.1.4. Lessee Accounting for Residual Value
        5. 21.4.1.5. Lessor Accounting for Residual Value
      2. 21.4.2. Sales-Type Leases (Lessor)
      3. 21.4.3. What do the numbers mean? XEROX TAKES ON THE SEC
      4. 21.4.4. Bargain-Purchase Option (Lessee)
      5. 21.4.5. Initial Direct Costs (Lessor)
      6. 21.4.6. Current versus Noncurrent
      7. 21.4.7. Disclosing Lease Data
    5. 21.5. LEASE ACCOUNTING—UNRESOLVED PROBLEMS
      1. 21.5.1. What do the numbers mean? SWAP MEET
    6. 21.6. CONVERGENCE CORNER: LEASE ACCOUNTING
      1. 21.6.1. RELEVANT FACTS
      2. 21.6.2. ABOUT THE NUMBERS
      3. 21.6.3. ON THE HORIZON
    7. 21.7. SUMMARY OF LEARNING OBJECTIVES
    8. 21A. EXAMPLES OF LEASE ARRANGEMENTS
    9. 21.9. EXAMPLE 1: HARMON, INC.
    10. 21.10. EXAMPLE 2: ARDEN'S OVEN CO.
    11. 21.11. EXAMPLE 3: MENDOTA TRUCK CO.
    12. 21.12. EXAMPLE 4: APPLELAND COMPUTER
    13. 21.13. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 21A
    14. 21B. SALE-LEASEBACKS
    15. 21.15. DETERMINING ASSET USE
      1. 21.15.1. Lessee
      2. 21.15.2. Lessor
    16. 21.16. SALE-LEASEBACK EXAMPLE
    17. 21.17. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 21B
    18. 21.18. FASB CODIFICATION
    19. 21.19. QUESTIONS
    20. 21.20. BRIEF EXERCISES
    21. 21.21. EXERCISES
    22. 21.22. PROBLEMS
    23. 21.23. CONCEPTS FOR ANALYSIS
    24. 21.24. USING YOUR JUDGMENT
      1. 21.24.1. FINANCIAL REPORTING
        1. 21.24.1.1. Financial Reporting Problem
          1. 21.24.1.1.1. The Procter & Gamble Company (P&G)
        2. 21.24.1.2. Comparative Analysis Case
          1. 21.24.1.2.1. UAL, Inc. and Southwest Airlines
        3. 21.24.1.3. Financial Statement Analysis Case
          1. 21.24.1.3.1. Tasty Baking Company
        4. 21.24.1.4. International Reporting Case
      2. 21.24.2. BRIDGE TO THE PROFESSION
        1. 21.24.2.1. Professional Research: FASB Codification
        2. 21.24.2.2. Professional Simulations
  26. 22. ACCOUNTING CHANGES AND ERROR ANALYSIS
    1. 22.1. SECTION 1 • ACCOUNTING CHANGES
    2. 22.2. CHANGES IN ACCOUNTING PRINCIPLE
      1. 22.2.1. What do the numbers mean? QUITE A CHANGE
      2. 22.2.2. Retrospective Accounting Change Approach
        1. 22.2.2.1. Retrospective Accounting Change: Long-Term Contracts
      3. 22.2.3. What do the numbers mean? CHANGE MANAGEMENT
        1. 22.2.3.1. Retrospective Accounting Change: Inventory Methods
        2. 22.2.3.2. Direct and Indirect Effects of Changes
      4. 22.2.4. Impracticability
    3. 22.3. CHANGES IN ACCOUNTING ESTIMATE
      1. 22.3.1. Prospective Reporting
      2. 22.3.2. Disclosures
    4. 22.4. CHANGE IN REPORTING ENTITY
    5. 22.5. CORRECTION OF ERRORS
      1. 22.5.1. Example of Error Correction
        1. 22.5.1.1. Single-Period Statements
        2. 22.5.1.2. Comparative Statements
    6. 22.6. SUMMARY OF ACCOUNTING CHANGES AND CORRECTION OF ERRORS
      1. 22.6.1. What do the numbers mean? CAN I GET MY MONEY BACK?
    7. 22.7. MOTIVATIONS FOR CHANGE OF ACCOUNTING METHOD
    8. 22.8. SECTION 2 • ERROR ANALYSIS
    9. 22.9. BALANCE SHEET ERRORS
    10. 22.10. INCOME STATEMENT ERRORS
    11. 22.11. BALANCE SHEET AND INCOME STATEMENT ERRORS
      1. 22.11.1. Counterbalancing Errors
        1. 22.11.1.1. Failure to Record Accrued Wages
        2. 22.11.1.2. Failure to Record Prepaid Expenses
        3. 22.11.1.3. Understatement of Unearned Revenue
        4. 22.11.1.4. Overstatement of Accrued Revenue
        5. 22.11.1.5. Overstatement of Purchases
      2. 22.11.2. Noncounterbalancing Errors
        1. 22.11.2.1. Failure to Record Depreciation
        2. 22.11.2.2. Failure to Adjust for Bad Debts
    12. 22.12. COMPREHENSIVE EXAMPLE: NUMEROUS ERRORS
    13. 22.13. PREPARATION OF FINANCIAL STATEMENTS WITH ERROR CORRECTIONS
    14. 22.14. CONVERGENCE CORNER: ACCOUNTING CHANGES AND ERRORS
      1. 22.14.1. RELEVANT FACTS
      2. 22.14.2. ABOUT THE NUMBERS
      3. 22.14.3. ON THE HORIZON
    15. 22.15. SUMMARY OF LEARNING OBJECTIVES
    16. 22A. CHANGING FROM OR TO THE EQUITY METHOD
    17. 22.17. CHANGE FROM THE EQUITY METHOD
      1. 22.17.1. Dividends in Excess of Earnings
    18. 22.18. CHANGE TO THE EQUITY METHOD
    19. 22.19. SUMMARY OF LEARNING OBJECTIVES FOR APPENDIX 22A
    20. 22.20. FASB CODIFICATION
    21. 22.21. QUESTIONS
    22. 22.22. BRIEF EXERCISES
    23. 22.23. EXERCISES
    24. 22.24. PROBLEMS
    25. 22.25. CONCEPTS FOR ANALYSIS
    26. 22.26. USING YOUR JUDGMENT
      1. 22.26.1. FINANCIAL REPORTING
        1. 22.26.1.1. Financial Reporting Problem
          1. 22.26.1.1.1. The Procter & Gamble Company (P&G)
        2. 22.26.1.2. Comparative Analysis Case
          1. 22.26.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
      2. 22.26.2. BRIDGE TO THE PROFESSION
        1. 22.26.2.1. Professional Research: FASB Codification
        2. 22.26.2.2. Professional Simulation
  27. 23. STATEMENT OF CASH FLOWS
    1. 23.1. SECTION 1 • PREPARATION OF THE STATEMENT OF CASH FLOWS
    2. 23.2. USEFULNESS OF THE STATEMENT OF CASH FLOWS
    3. 23.3. CLASSIFICATION OF CASH FLOWS
      1. 23.3.1. What do the numbers mean? HOW'S MY CASH FLOW?
    4. 23.4. FORMAT OF THE STATEMENT OF CASH FLOWS
    5. 23.5. STEPS IN PREPARATION
    6. 23.6. FIRST EXAMPLE—2009
      1. 23.6.1. Step 1: Determine the Change in Cash
      2. 23.6.2. Step 2: Determine Net Cash Flow from Operating Activities
        1. 23.6.2.1. Direct Method
        2. 23.6.2.2. Indirect Method
      3. 23.6.3. What do the numbers mean? PUMPING UP CASH
      4. 23.6.4. Step 3: Determine Net Cash Flows from Investing and Financing Activities
        1. 23.6.4.1. Statement of Cash Flows—2009
    7. 23.7. SECOND EXAMPLE—2010
      1. 23.7.1. Step 1: Determine the Change in Cash
      2. 23.7.2. Step 2: Determine Net Cash Flow from Operating Activities—Indirect Method
      3. 23.7.3. Step 3: Determine Net Cash Flows from Investing and Financing Activities
      4. 23.7.4. Statement of Cash Flows—2010
    8. 23.8. THIRD EXAMPLE—2011
      1. 23.8.1. Step 1: Determine the Change in Cash
      2. 23.8.2. Step 2: Determine Net Cash Flow from Operating Activities—Indirect Method
      3. 23.8.3. Step 3: Determine Net Cash Flows from Investing and Financing Activities
      4. 23.8.4. Statement of Cash Flows—2011
    9. 23.9. SOURCES OF INFORMATION FOR THE STATEMENT OF CASH FLOWS
    10. 23.10. NET CASH FLOW FROM OPERATING ACTIVITIES—INDIRECT VERSUS DIRECT METHOD
      1. 23.10.1. Indirect Method
      2. 23.10.2. Direct Method—An Example
        1. 23.10.2.1. Summary of Net Cash Flow from Operating Activities—Direct Method
      3. 23.10.3. Direct versus Indirect Controversy
        1. 23.10.3.1. In Favor of the Direct Method
        2. 23.10.3.2. In Favor of the Indirect Method
        3. 23.10.3.3. Special Rules Applying to Direct and Indirect Methods
      4. 23.10.4. What do the numbers mean? NOT WHAT IT SEEMS
    11. 23.11. SECTION 2 • SPECIAL PROBLEMS IN STATEMENT PREPARATION
    12. 23.12. ADJUSTMENTS SIMILAR TO DEPRECIATION
    13. 23.13. ACCOUNTS RECEIVABLE (NET)
      1. 23.13.1. Indirect Method
      2. 23.13.2. Direct Method
    14. 23.14. OTHER WORKING CAPITAL CHANGES
    15. 23.15. NET LOSSES
    16. 23.16. GAINS
    17. 23.17. STOCK OPTIONS
    18. 23.18. POSTRETIREMENT BENEFIT COSTS
    19. 23.19. EXTRAORDINARY ITEMS
    20. 23.20. SIGNIFICANT NONCASH TRANSACTIONS
      1. 23.20.1. What do the numbers mean? CASH FLOW TOOL
    21. 23.21. SECTION 3 • USE OF A WORKSHEET
    22. 23.22. PREPARATION OF THE WORKSHEET
    23. 23.23. ANALYSIS OF TRANSACTIONS
      1. 23.23.1. Change in Retained Earnings
      2. 23.23.2. Accounts Receivable (Net)
      3. 23.23.3. Inventories
      4. 23.23.4. Prepaid Expense
      5. 23.23.5. Investment in Stock
      6. 23.23.6. Land
      7. 23.23.7. Equipment and Accumulated Depreciation
      8. 23.23.8. Building Depreciation and Amortization of Trademark
      9. 23.23.9. Other Noncash Charges or Credits
      10. 23.23.10. Common Stock and Related Accounts
      11. 23.23.11. Final Reconciling Entry
    24. 23.24. PREPARATION OF FINAL STATEMENT
    25. 23.25. CONVERGENCE CORNER: STATEMENT OF CASH FLOWS
      1. 23.25.1. RELEVANT FACTS
      2. 23.25.2. ABOUT THE NUMBERS
      3. 23.25.3. ON THE HORIZON
    26. 23.26. SUMMARY OF LEARNING OBJECTIVES
    27. 23.27. FASB CODIFICATION
    28. 23.28. QUESTIONS
    29. 23.29. BRIEF EXERCISES
    30. 23.30. EXERCISES
    31. 23.31. PROBLEMS
    32. 23.32. CONCEPTS FOR ANALYSIS
    33. 23.33. USING YOUR JUDGMENT
      1. 23.33.1. FINANCIAL REPORTING
        1. 23.33.1.1. Financial Reporting Problem
          1. 23.33.1.1.1. The Procter & Gamble Company (P&G)
        2. 23.33.1.2. Comparative Analysis Case
          1. 23.33.1.2.1. The Coca-Cola Company and PepsiCo, Inc.
        3. 23.33.1.3. Financial Statement Analysis Case
          1. 23.33.1.3.1. Vermont Teddy Bear Co.
        4. 23.33.1.4. International Reporting Case
      2. 23.33.2. BRIDGE TO THE PROFESSION
        1. 23.33.2.1. Professional Research: FASB Codification
        2. 23.33.2.2. Professional Simulation
  28. 24. FULL DISCLOSURE IN FINANCIAL REPORTING
    1. 24.1. FULL DISCLOSURE PRINCIPLE
      1. 24.1.1. Increase in Reporting Requirements
      2. 24.1.2. Differential Disclosure
      3. 24.1.3. What do the numbers mean? "THE HEART OF THE MATTER"
    2. 24.2. NOTES TO THE FINANCIAL STATEMENTS
      1. 24.2.1. Accounting Policies
      2. 24.2.2. Common Notes
      3. 24.2.3. What do the numbers mean? FOOTNOTE SECRETS
    3. 24.3. DISCLOSURE ISSUES
      1. 24.3.1. Disclosure of Special Transactions or Events
      2. 24.3.2. Post-Balance-Sheet Events (Subsequent Events)
      3. 24.3.3. Reporting for Diversified (Conglomerate) Companies
        1. 24.3.3.1. Objective of Reporting Segmented Information
        2. 24.3.3.2. Basic Principles
        3. 24.3.3.3. Identifying Operating Segments
        4. 24.3.3.4. Measurement Principles
        5. 24.3.3.5. Segmented Information Reported
        6. 24.3.3.6. Illustration of Disaggregated Information
      4. 24.3.4. Interim Reports
        1. 24.3.4.1. Interim Reporting Requirements
        2. 24.3.4.2. Unique Problems of Interim Reporting
      5. 24.3.5. What do the numbers mean? "I WANT IT FASTER"
    4. 24.4. AUDITOR'S AND MANAGEMENT'S REPORTS
      1. 24.4.1. Auditor's Report
      2. 24.4.2. Management's Reports
        1. 24.4.2.1. Management's Discussion and Analysis
        2. 24.4.2.2. Management's Responsibilities for Financial Statements
    5. 24.5. CURRENT REPORTING ISSUES
      1. 24.5.1. Reporting on Financial Forecasts and Projections
        1. 24.5.1.1. Experience in Great Britain
        2. 24.5.1.2. Questions of Liability
      2. 24.5.2. Internet Financial Reporting
      3. 24.5.3. What do the numbers mean? NEW FORMATS, NEW DISCLOSURE
      4. 24.5.4. Fraudulent Financial Reporting
        1. 24.5.4.1. Causes of Fraudulent Financial Reporting
      5. 24.5.5. What do the numbers mean? HERE'S A FRAUD
      6. 24.5.6. Criteria for Making Accounting and Reporting Choices
    6. 24.6. CONVERGENCE CORNER: DISCLOSURE
      1. 24.6.1. RELEVANT FACTS
      2. 24.6.2. ABOUT THE NUMBERS
      3. 24.6.3. ON THE HORIZON
    7. 24.7. SUMMARY OF LEARNING OBJECTIVES
    8. 24A. BASIC FINANCIAL STATEMENT ANALYSIS
    9. 24.9. PERSPECTIVE ON FINANCIAL STATEMENT ANALYSIS
    10. 24.10. RATIO ANALYSIS
      1. 24.10.1. Limitations of Ratio Analysis
    11. 24.11. COMPARATIVE ANALYSIS
    12. 24.12. PERCENTAGE (COMMON-SIZE) ANALYSIS
    13. 24.13. SUMMARY OF LEARNING OBJECTIVES FOR APPENDIX 24A
    14. 24B. INTERNATIONAL ACCOUNTING STANDARDS
    15. 24.15. THE PRESENT ENVIRONMENT
    16. 24.16. REASONS TO UNDERSTAND INTERNATIONAL ACCOUNTING STANDARDS
    17. 24.17. THE CHALLENGE OF INTERNATIONAL ACCOUNTING
    18. 24.18. WHO ARE THE KEY PLAYERS IN DEVELOPING INTERNATIONAL STANDARDS?
      1. 24.18.1. IASB
      2. 24.18.2. Other Organizations
    19. 24.19. ACCOUNTING STANDARD-SETTING AND INTERNATIONAL CONVERGENCE
      1. 24.19.1. Challenges to Convergence
    20. 24.20. CONCLUDING REMARKS
    21. 24.21. SUMMARY OF LEARNING OBJECTIVE FOR APPENDIX 24B
    22. 24.22. FASB CODIFICATION
    23. 24.23. QUESTIONS
    24. 24.24. BRIEF EXERCISES
    25. 24.25. EXERCISES
    26. 24.26. PROBLEMS
    27. 24.27. CONCEPTS FOR ANALYSIS
    28. 24.28. USING YOUR JUDGMENT
      1. 24.28.1. FINANCIAL REPORTING
        1. 24.28.1.1. Financial Reporting Problem
          1. 24.28.1.1.1. The Procter & Gamble Company (P&G)
        2. 24.28.1.2. Comparative Analysis Case
          1. 24.28.1.2.1. The Coca-Cola Company versus PepsiCo, Inc.
        3. 24.28.1.3. *Financial Statement Analysis Case
      2. 24.28.2. BRIDGE TO THE PROFESSION
        1. 24.28.2.1. Professional Research: FASB Codification
        2. 24.28.2.2. *Professional Simulation