Advanced Financial Accounting

1、Jiangxi University of Finance and Economics International School Advanced Financial AccountingCourse Syllabus: Course: Advanced Financial AccountingUnit convener: Professor Matin KhanObjectives:Advanced Financial Accounting is designed to prepare you to interpret and analyze financial statements eff

2、ectively. The course explores in greater depth financial reporting topics introduced in the first-year course in financial accounting and also examines additional topics not covered in that course. As in the first-year course, we take the perspective of users (i.e., not preparers) of financial state

3、ments. However, we develop sufficient understanding of the concepts and recording procedures to enable you to understand the details of financial disclosures and to interpret them in an informed manner. We discuss each financial reporting issue in terms of its effect on assessments of a firms profit

4、ability and risk. This course is designed primarily for students who expect to be intensive users of financial statements as part of their professional responsibilities.Requirements:Written work (e.g., textbook problems, problem sets based on recent 10-Ks) is assigned for most class sessions. Althou

5、gh homework is not collected, class discussions of these assignments are a key component of this course, and class discussion is clearly more interesting and more productive when students have read the assigned materials and prepared written work thoroughly and thoughtfully. I do call on students (m

6、ore or less randomly), but I also welcome voluntary participation. Keep in mind that sometimes the most valuable contribution is a thoughtful question.There will be three 90-minute exams: January 30 (first half of class), February 20 (first half of class), and during the final exam period. They are

7、open book and open notes.Materials:The required textbook is Clyde P. Stickney, Paul R. Brown, and James M. Wahlen, Financial Reporting and Statement Analysis: A Strategic Perspective, 5th edition (Thomson South-Western, 2004) cited as FRSA. Most of the assigned reading and some problems are in this

8、book. Additional materials are included in the course packet CP or will be distributed through the term. Useful websites include: Corporate filings (e.g., 10-K, 10-Q) with the Securities and Exchange Commission: Pronouncements of the Financial Accounting Standards Board: Pronouncements of the Intern

9、ational Accounting Standards Board: GradingExam 1 25%Exam 2 30%Exam 3 30%Class Participation 15%ScheduleClass 1: Monday, January 9Review of Financial Statements; Quality and Sustainability of EarningsLearning Objectives:Review the structure of the financial statements and the nuts and bolts of trans

10、actions analysis. Understand the concept of “earnings quality” and both the mechanics and appropriate circumstances for adjusting reported income for purposes of analysis. Review most common differences (both temporary and permanent) between book (GAAP) and taxable income.FRSA, Chapter 2 (especially

11、 pp. 84-93) and Chapter 6Problems 2.6 and 2.9 (FRSA)Analysis of Earnings: H. J. Heinz Company (CP) Optional: Optional Problems: FRSA Problems 2.5, 2.8, and 6.4Class 2: Tuesday, January 17Revenue and Expense RecognitionLearning Objectives:Observe the effects on the financial statements of variations

12、in the timing of income recognition. Understand the recognition and measurement issues in accounting for fixed and intangible assets. Understand GAAP governing research and development costs and possible adjustments for purposes of analysis.FRSA, Chapter 7, pp. 429-448, 459-475Case 7.1 Arizona Land

13、Development Company, parts b-h (FRSA)Case 7.2 Chiron Corporation (FRSA) Optional: Optional Problem: FRSA Problem 7.5Class 3: Monday, January 23Liabilities, Leases, and Off-Balance-Sheet FinancingLearning Objectives:Understand GAAP governing the recognition of accounting liabilities and some typical

14、mechanisms for off-balance sheet financing. Know the difference between operating and capital leases as per GAAP criteria and in their effects on the financial statements. Convert operating leases (hypothetically) to capital leases for purposes of financial statement analysis. Analyze financial risk

15、 and asset productivity with and without capitalization of operating leases.FRSA, Chapter 8, pp. 519-546Problem 8.1 (FRSA)Analysis of Leases: Starbucks and Pets (CP) Optional: Optional Problems: FRSA Problems 8.3 and 8.7Class 4: Monday, January 30Introduction to PensionsLearning Objectives:Illustrat

16、e common features of defined benefit plans to highlight financial reporting issues. Distinguish between GAAP governing corporate reporting of pensions and economic status of pensions. Analyze corporate footnote disclosures regarding pensions.ExamExam - Quality of Earnings, Income Measurement, Leases

17、 & Off-Balance-Sheet FinancingClass 5: Monday, February 6Pensions and Other Post-Retirement Benefits; Derivatives and HedgingLearning Objectives:Use pension and health care benefit disclosures to measure the economic status and financial performance of a plan. Observe the role of actuarial assum

18、ptions in accounting for pensions and health care benefits. Restate the financial statements of an employer to include an under funded pension or health care benefits liability. Understand the economics of hedging certain financial risks using forward contracts and swaps. Understand GAAP for derivat

19、ives particularly the distinction between fair value hedges and cash flow hedges and the difference in their reporting treatment. Interpret disclosures regarding derivatives and hedging activities.FRSA, Chapter 8, pp. 546-580; Navigating the Notes: Defined Benefit Pension Plans (CP)Analysis of Defin

20、ed Benefit Pensions: Honeywell International (CP) Analysis of Derivatives: Green Mountain Coffee Roasters (CP) FRSA Problems 8.11 and 8.8 Optional: Optional Problems: FRSA Problems 8.10 and 8.12Class 6: Monday, February 13Deferred Income Taxes; Corporate AcquisitionsLearning Objectives:Understand th

21、e temporary differences that create deferred tax assets and liabilities. Use disclosures of individual deferred tax assets and liabilities to understand differences between book and tax reporting. Use disclosures of the effective tax rate to understand why it differs from the statutory tax rate. Und

22、erstand the purchase method of accounting for corporate acquisitions and the opportunities it presents for earnings management. Observe the interaction between legal, accounting, tax, and financing factors in structuring a corporate acquisition.FRSA, Chapter 8, 580-594; Chapter 9, pp. 642-652.Analys

23、is of Deferred Income Taxes: Cisco Systems (CP) FRSA Problem 8.16 and Case 9.1 (Fisher Corporation) Optional: Optional Problems: FRSA Problems 8.15 and 9.1Class 7: Monday, February 20Interoperate InvestmentsLearning Objectives:Understand the link between the nature and accounting treatment of variou

24、s interoperate investments. Review the mechanics of the equity and market methods.Exam: Pensions and Other Post-Retirement Benefits, Deferred Income Taxes, and DerivativesClass 8: Monday, February 27Interoperate Investments; Foreign Currency TranslationLearning Objectives:Understand the link between

25、 the nature and accounting treatment of various interoperate investments. Examine the contrasting effects on the financial statements of the equity method, partial consolidation, and full consolidation.FRSA, Chapter 9, pp. 652-684; Navigating the Notes: Equity Method Investments (CP)FRSA, Problem 9.8