Description
Intermediate Accounting: Principles and Analysis Edition 2
by Terry D. Warfield EBOOK PDF Instant Download
Table of Contents
Copyright
About The Authors
Preface
Acknowledgments
Brief Contents
Contents
Chapter 1: FINANCIAL ACCOUNTING AND ACCOUNTING STANDARDS
Financial Statements and Financial Reporting
Accounting and Capital Allocation
The Challenges Facing Financial Accounting
Objectives of Financial Reporting
The Need to Develop Standards
Parties Involved in Standard Setting
Securities and Exchange Commission (SEC)
American Institute of Certified Public Accountants (AICPA)
Financial Accounting Standards Board (FASB)
Governmental Accounting Standards Board (GASB)
Changing Role of the AICPA
Generally Accepted Accounting Principles
Issues in Financial Reporting
Standard Setting in a Political Environment
The Expectations Gap
International Accounting Standards
Ethics in the Environment of Financial Accounting
Conclusion
Chapter 2: CONCEPTUAL FRAMEWORK UNDERLYING FINANCIAL ACCOUNTING
Conceptual Framework
The Need for a Conceptual Framework
Development of a Conceptual Framework
First Level: Basic Objectives
Second Level: Fundamental Concepts
Qualitative Characteristics of Accounting Information
Basic Elements
Third Level: Recognition and Measurement Concepts
Basic Assumptions
Basic Principles of Accounting
Constraints
Summary of the Structure
Chapter 3: THE ACCOUNTING INFORMATION SYSTEM
Accounting Information System
Basic Terminology
Debits and Credits
Basic Equation
Financial Statements and Ownership Structure
The Accounting Cycle
Identifying and Recording Transactions and Other Events
Journalizing
Posting
Trial Balance
Adjusting Entries
Adjusted Trial Balance
Preparing Financial Statements
Closing
Post-Closing Trial Balance
Reversing Entries
The Accounting Cycle Summarized
Financial Statements for a Merchandising Company
Behind the Numbers: Appendix 3A
Using Reversing Entries
Example of Reversing Entries—Accruals
Example of Reversing Entries—Prepayments
Summary of Reversing Entries
Behind the Numbers: Appendix 3B
Using a Worksheet: The Accounting Cycle Revisited
Worksheet Columns
Adjustments Entered on the Worksheet
Preparing Financial Statements from a Worksheet
Chapter 4: BALANCE SHEET
Use and Limitations
Usefulness of the Balance Sheet
Limitations of the Balance Sheet
Classification in the Balance Sheet
Current Assets
Noncurrent Assets
Liabilities
Owners’ (Stockholders’) Equity
Balance Sheet Format
Additional Information Reported
Contingencies
Accounting Policies
Contractual Situations
Post–Balance-Sheet Events (Subsequent Events)
Fair Values
Techniques of Disclosure
Parenthetical Explanations
Notes
Cross-Reference and Contra Items
Supporting Schedules
Terminology
Chapter 5: INCOME STATEMENT AND RELATED INFORMATION
Income Statement
Usefulness of the Income Statement
Limitations of the Income Statement
Quality of Earnings
Format of the Income Statement
Elements of the Income Statement
Single-Step Income Statements
Multiple-Step Income Statements
Condensed Income Statements
Reporting Irregular Items
Discontinued Operations
Extraordinary Items
Unusual Gains and Losses
Changes in Accounting Principle
Changes in Estimates
Corrections of Errors
Summary of Irregular Items
Special Reporting Issues
Intraperiod Tax Allocation
Earnings per Share
Retained Earnings Statement
Comprehensive Income
Chapter 6: STATEMENT OF CASH FLOWS
The Statement of Cash Flows: Purpose and Format
Purpose of the Statement of Cash Flows
Classification of Cash Flows
Significant Noncash Activities
Format of the Statement of Cash Flows
Preparing the Statement of Cash Flows
Indirect and Direct Methods
Preparation of the Statement of Cash Flows
First Year of Operations—2008
Second Year of Operations—2009
Summary of Conversion to Net Cash Provided by Operating Activities—Indirect Method
Using Cash Flows to Evaluate a Company
Free Cash Flow
Assessing Liquidity and Solvency Using Cash Flows
Limitations of the Statement of Cash Flows
Behind the Numbers: Appendix 6A
Ratio Analysis—A Reference
Using Ratios to Analyze Financial Performance
Chapter 7: REVENUE RECOGNITION
The Current Environment
Guidelines for Revenue Recognition
Departures from the Sale Basis
Revenue Recognition at Point of Sale (Delivery)
Sales with Buyback Agreements
Sales When Right of Return Exists
Trade Loading and Channel Stuffing
Revenue Recognition before Delivery
Percentage-of-Completion Method
Completed-Contract Method
Completion-of-Production Basis
Revenue Recognition after Delivery
Installment-Sales Method
Cost-Recovery Method
Deposit Method
Summary of Revenue Recognition Bases
Observations
Behind the Numbers: Appendix 7A
Revenue Recognition Procedures
Long-Term Contracts
Installment Sales
Chapter 8: CASH AND RECEIVABLES
Section 1 Cash
What Is Cash?
Management and Control of Cash
Reporting Cash
Restricted Cash
Bank Overdrafts
Cash Equivalents
Summary of Cash-Related Items
Section 2 Receivables
Recognition of Accounts Receivable
Trade Discounts
Cash Discounts (Sales Discounts)
Nonrecognition of Interest Element
Valuation of Accounts Receivable
Uncollectible Accounts Receivable
Recognition of Notes Receivable
Note Issued at Face Value
Note Not Issued at Face Value
Choice of Interest Rate
Valuation of Notes Receivable
Disposition of Accounts and Notes Receivable
Secured Borrowing
Sales of Receivables
Secured Borrowing versus Sale
Presentation and Analysis
Presentation of Receivables
Analysis of Receivables
Behind the Numbers: Appendix 8A
Cash Controls
Using Bank Accounts
The Imprest Petty Cash System
Physical Protection of Cash Balances
Reconciliation of Bank Balances
Chapter 9: ACCOUNTING FOR INVENTORIES
Inventory Classification and Systems
Classification
Inventory Systems
Basic Issues in Inventory Valuation
Physical Goods Included in Inventory
Costs Included in Inventory
Which Cost Flow Assumption to Adopt?
Special Issues Related to LIFO
LIFO Reserve
LIFO Liquidation
Dollar-Value LIFO
Comparison of LIFO Approaches
Basis for Selection of Inventory Method
Lower-of-Cost-or-Market
Lower-of-Cost-or-Market—Ceiling and Floor
How Lower-of-Cost-or-Market Works
Methods of Applying Lower-of-Cost-or-Market
Evaluation of the Lower-of-Cost-or-Market Rule
Presentation and Analysis
Presentation of Inventories
Analysis of Inventories
Behind the Numbers: Appendix 9A
Gross Profit Method
Computation of Gross Profit Percentage
Evaluation of Gross Profit Method
Chapter 10: ACCOUNTING FOR PROPERTY, PLANT, AND EQUIPMENT
Acquisition and Valuation of Property, Plant, and Equipment
Cost of Land
Cost of Buildings
Cost of Equipment
Self-Constructed Assets
Interest Costs During Construction
Other Valuation Issues
Costs Subsequent to Acquisition
Additions
Improvements and Replacements
Rearrangement and Reinstallation
Repairs
Summary of Costs Subsequent to Acquisition
Use of Property, Plant, and Equipment: Depreciation
Factors Involved in the Depreciation Process
Methods of Depreciation
Special Depreciation Issues
Dispositions of Plant Assets
Sale of Plant Assets
Involuntary Conversion
Exchanges
Presentation and Analysis
Presentation of Property, Plant, and Equipment
Analysis of Property, Plant, and Equipment
Behind the Numbers: Appendix 10A
Interest-Capitalization Procedures
Interest Capitalization
Chapter 11: INTANGIBLE ASSETS
Intangible Asset Issues
Characteristics
Valuation
Amortization of Intangibles
Types of Intangible Assets
Marketing-Related Intangible Assets
Customer-Related Intangible Assets
Artistic-Related Intangible Assets
Contract-Related Intangible Assets
Technology-Related Intangible Assets
Goodwill
Impairments
Impairment of Property, Plant, and Equipment
Impairment of Limited-Life Intangibles
Impairment of Indefinite-Life Intangibles Other Than Goodwill
Impairment of Goodwill
Restoration of Impairment Loss
Impairment of Assets to Be Disposed of
Research and Development Costs
Identifying R&D Activities
Accounting for R&D Activities
Other Costs Similar to R&D Costs
Conceptual Questions
Presentation of Intangibles and Related Items
Presentation of Intangible Assets
Presentation of Research and Development Costs
Chapter 12: ACCOUNTING FOR LIABILITIES
Section 1 Current Liabilities
What Is a Liability?
What Is a Current Liability?
Accounts Payable
Notes Payable
Current Maturities of Long-Term Debt
Dividends Payable
Unearned Revenues
Section 2 Long-Term Debt
Issuing Bonds
Types of Bonds
Valuation of Bonds Payable—Discount and Premium
Bonds Issued at Par on Interest Date
Bonds Issued at Discount or Premium on Interest Date
Classification of Discount and Premium
Costs of Issuing Bonds
Extinguishment of Debt
Section 3 Special Issues
Contingencies
Gain Contingencies
Loss Contingencies
Off–Balance-Sheet Financing
Different Forms
Rationale
Presentation and Analysis
Presentation of Current Liabilities
Presentation of Long-Term Debt
Presentation of Contingencies
Analysis of Current Liabilities
Analysis of Long-Term Debt
Behind the Numbers: Appendix 12A
Effective-Interest Amortization
Bonds Issued at a Discount
Bonds Issued at a Premium
Accruing Interest
Chapter 13: STOCKHOLDERS’ EQUITY
The Corporate Form of Organization
State Corporate Law
Capital Stock or Share System
Variety of Ownership Interests
Corporate Capital
Issuance of Stock
Reacquisition of Shares
Preferred Stock
Features of Preferred Stock
Accounting for and Reporting Preferred Stock
Dividend Policy
Financial Condition and Dividend Distributions
Types of Dividends
Stock Split
Disclosure of Restrictions on Retained Earnings
Presentation and Analysis of Stockholders’ Equity
Presentation
Analysis
Behind the Numbers: Appendix 13A
Accounting for Financial Instruments with Both Debt and Equity Characteristics
Convertible Debt
Stock Warrants Issued with Other Securities
Conceptual Questions
Chapter 14: INVESTMENTS
Section 1 Investments in Debt Securities
Held-to-Maturity Securities
Available-for-Sale Securities
Example: Single Security
Example: Portfolio of Securities
Sale of Available-for-Sale Securities
Financial Statement Presentation
Trading Securities
Section 2 Investments in Equity Securities
Holdings of Less Than 20%
Available-for-Sale Securities
Trading Securities
Holdings Between 20% and 50%
Equity Method
Holdings of More Than 50%
Section 3 Other Reporting Issues
Financial Statement Presentation of Investments
Disclosures Required Under the Equity Method
Reclassification Adjustments
Comprehensive Example
Impairment of Value
Transfers Between Categories
Fair Value Controversy
Measurement Based on Intent
Gains Trading
Liabilities Not Fairly Valued
Subjectivity of Fair Values
Summary of Reporting Treatment of Securities
Chapter 15: ACCOUNTING FOR INCOME TAXES
Fundamentals of Accounting for Income Taxes
Future Taxable Amounts and Deferred Taxes
Future Deductible Amounts and Deferred Taxes
Income Statement Presentation
Specific Differences
Tax Rate Considerations
Accounting for Net Operating Losses
Loss Carryback
Loss Carryforward
Loss Carryback Example
Loss Carryforward Example
Financial Statement Presentation
Balance Sheet
Income Statement
Review of the Asset–Liability Method
Chapter 16: ACCOUNTING FOR COMPENSATION
Salary and Bonuses
Payroll Deductions
Compensated Absences
Bonuses
Stock Compensation Plans
The Major Reporting Issue
Accounting for Stock Compensation
Employee Stock Purchase Plans
Disclosure of Compensation Plans
Debate over Stock Option Accounting
Postretirement Benefits
Defined-Contribution Plan
Defined-Benefit Plan
Components of Pension Expense
Using a Pension Worksheet
Reporting Pension Amounts
Other Postretirement Expenses
Concluding Remarks
Chapter 17: ACCOUNTING FOR LEASES
The Leasing Environment
Who Are the Players?
Advantages of Leasing
Conceptual Nature of a Lease
Accounting by the Lessee
Capitalization Criteria
Asset and Liability Accounted for Differently
Capital Lease Method (Lessee)
Operating Method (Lessee)
Comparison of Capital Lease with Operating Lease
Accounting by the Lessor
Economics of Leasing
Classification of Leases by the Lessor
Direct-Financing Method (Lessor)
Operating Method (Lessor)
Other Accounting Issues
Sales-Type Leases (Lessor)
Disclosing Lease Data
Lease Accounting—Unresolved Problems
Chapter 18: ADDITIONAL REPORTING ISSUES
Section 1 Accounting Changes
Changes in Accounting Principle
Retrospective Accounting Change Approach
Reporting a Change in Principle
Retained Earnings Adjustment
Direct and Indirect Effects of Changes
Impracticability
Changes in Accounting Estimate
Disclosures
Reporting a Correction of an Error
Example
Summary of Accounting Changes and Corrections of Errors
Section 2 Reporting Earnings per Share
Earnings per Share—Simple Capital Structure
Preferred Stock Dividends
Weighted-Average Number of Shares Outstanding
Comprehensive Example
Earnings per Share—Complex Capital Structure
Diluted EPS—Convertible Securities
Diluted EPS—Options and Warrants
Antidilution Revisited
EPS Presentation and Disclosure
Summary of EPS Computation
Appendix A: Accounting and the Time Value of Money
The Nature of Interest
Simple Interest
Compound Interest
Fundamental Variables
Single-Sum Problems
Future Value of a Single Sum
Present Value of a Single Sum
Solving for Other Unknowns in Single-Sum Problems
Annuities
Future Value of an Ordinary Annuity
Future Value of an Annuity Due
Examples of Future Value of Annuity Problems
Present Value of an Ordinary Annuity
Present Value of an Annuity Due
Examples of Present Value of Annuity Problems
More Complex Situations
Deferred Annuities
Valuation of Long-Term Bonds
Effective-Interest Method of Amortization of BondDiscount or Premium
Present Value Measurement
Choosing an Appropriate Interest Rate
Example of Expected Cash Flow
Appendix B: Reporting Cash Flows
Section 1 Indirect Method
Preparing the Statement of Cash Flows
Step 1: Determining the Net Increase/Decrease in Cash
Step 2: Determining Net Cash Flow Provided/Used by Operating Activities
Step 3: Determining Net Cash Flow Provided/Used by Investing and Financing Activities
Statement of Cash Flows—2008
Special Problems in Statement Preparation
Adjustments Similar to Depreciation
Accounts Receivable (Net)
Other Working Capital Changes
Net Losses
Gains/Losses
Stock Options
Postretirement Benefit Costs
Extraordinary Items
Significant Noncash Transactions
Section 2 Direct Method
Indirect Method
Direct Method—An Example
Summary of Net Cash Flow from Operating Activities—Direct Method
Company Index
Subject Index
Official Accounting Pronouncements
Endpapers
