Intermediate Accounting, 14th Edition

Cover......Page 1
Title Page......Page 5
Copyright......Page 6
Contents......Page 26
Thinking Outside the Box......Page 38
Accounting and Capital Allocation......Page 40
Objective of Financial Reporting......Page 41
What Do the Numbers Mean? Don't Forget Stewardship......Page 42
Parties Involved in Standard-Setting......Page 43
Securities and Exchange Commission (SEC)......Page 44
American Institute of Certified Public Accountants (AICPA)......Page 45
Financial Accounting Standards Board (FASB)......Page 46
Generally Accepted Accounting Principles......Page 49
FASB Codification......Page 50
GAAP in a Political Environment......Page 52
What Do the Numbers Mean? Fair Consequences?......Page 53
The Expectations Gap......Page 54
Financial Reporting Challenges......Page 55
Ethics in the Environment of Financial Accounting......Page 56
Conclusion......Page 57
FASB Codification......Page 59
IFRS Insights......Page 68
What Is It?......Page 78
Need for a Conceptual Framework......Page 80
Development of a Conceptual Framework......Page 81
Overview of the Conceptual Framework......Page 82
Qualitative Characteristics of Accounting Information......Page 83
What Do the Numbers Mean? Living in a Material World......Page 86
What Do the Numbers Mean? Show Me the Earnings!......Page 89
Basic Elements......Page 90
Third Level: Recognition and Measurement Concepts......Page 91
What Do the Numbers Mean? Whose Company Is It?......Page 92
Basic Principles of Accounting......Page 94
Constraints......Page 99
Summary of the Structure......Page 100
FASB Codification......Page 103
IFRS Insights......Page 117
Needed: A Reliable Information System......Page 122
Basic Terminology......Page 124
Debits and Credits......Page 125
The Accounting Equation......Page 126
Financial Statements and Ownership Structure......Page 128
Identifying and Recording Transactions and Other Events......Page 129
Journalizing......Page 131
Posting......Page 132
Adjusting Entries......Page 136
What Do the Numbers Mean? Am I Covered?......Page 146
Preparing Financial Statements......Page 147
Closing......Page 149
The Accounting Cycle Summarized......Page 152
Statement of Retained Earnings......Page 153
Balance Sheet......Page 154
Closing Entries......Page 156
APPENDIX 3A: Cash-Basis Accounting versus Accrual-Basis Accounting......Page 157
Conversion from Cash Basis to Accrual Basis......Page 159
Operating Expense Computation......Page 160
Illustration of Reversing Entries—Accruals......Page 162
Illustration of Reversing Entries—Deferrals......Page 163
Summary of Reversing Entries......Page 164
Adjustments Columns......Page 165
Adjustments Entered on the Worksheet......Page 166
Preparing Financial Statements from a Worksheet......Page 167
IFRS Insights......Page 189
Watch Out for Pro Forma......Page 194
Limitations of the Income Statement......Page 196
Quality of Earnings......Page 197
Elements of the Income Statement......Page 198
Single-Step Income Statements......Page 199
Multiple-Step Income Statements......Page 200
Condensed Income Statements......Page 203
Reporting Irregular Items......Page 204
Discontinued Operations......Page 205
Extraordinary Items......Page 206
Unusual Gains and Losses......Page 208
Changes in Estimates......Page 210
Corrections of Errors......Page 211
Summary of Irregular Items......Page 212
Intraperiod Tax Allocation......Page 213
Earnings per Share......Page 214
Retained Earnings Statement......Page 216
Comprehensive Income......Page 217
FASB Codification......Page 222
IFRS Insights......Page 240
Hey, It Doesn’t Balance!......Page 248
What Do the Numbers Mean? Grounded......Page 250
Classification in the Balance Sheet......Page 251
Current Assets......Page 253
Noncurrent Assets......Page 256
Liabilities......Page 258
What Do the Numbers Mean? "Show Me the Assets!"......Page 259
Balance Sheet Format......Page 261
Purpose of the Statement of Cash Flows......Page 263
Content and Format of the Statement of Cash Flows......Page 264
Preparing the Statement of Cash Flows......Page 266
Significant Noncash Activities......Page 268
Financial Liquidity......Page 269
Free Cash Flow......Page 270
What Do the Numbers Mean? "There Ought to Be a Law"......Page 271
Accounting Policies......Page 272
What Do the Numbers Mean? What About Your Commitments?......Page 273
Fair Values......Page 274
Notes......Page 275
Supporting Schedules......Page 277
Terminology......Page 278
Using Ratios to Analyze Performance......Page 280
APPENDIX 5B: Specimen Financial Statements: The Procter & Gamble Company......Page 282
FASB Codification......Page 314
IFRS Insights......Page 337
The Magic of Interest......Page 344
Applications of Time Value Concepts......Page 346
The Nature of Interest......Page 347
Compound Interest......Page 348
What Do the Numbers Mean? A Pretty Good Start......Page 349
Single-Sum Problems......Page 352
Future Value of a Single Sum......Page 353
Present Value of a Single Sum......Page 354
Solving for Other Unknowns in Single-Sum Problems......Page 356
Annuities......Page 357
Future Value of an Ordinary Annuity......Page 358
Future Value of an Annuity Due......Page 360
Examples of Future Value of Annuity Problems......Page 361
Present Value of an Ordinary Annuity......Page 363
Present Value of an Annuity Due......Page 365
Examples of Present Value of Annuity Problems......Page 366
Deferred Annuities......Page 368
Valuation of Long-Term Bonds......Page 370
Effective-Interest Method of Amortization of Bond Discount or Premium......Page 371
Present Value Measurement......Page 372
Example of Expected Cash Flow......Page 373
FASB Codification......Page 376
No-Tell Nortel......Page 400
Reporting Cash......Page 402
Summary of Cash-Related Items......Page 404
Accounts Receivable......Page 405
Recognition of Accounts Receivable......Page 406
Valuation of Accounts Receivable......Page 408
Recognition of Notes Receivable......Page 414
Valuation of Notes Receivable......Page 418
Special Issues......Page 419
Disposition of Accounts and Notes Receivable......Page 420
What Do the Numbers Mean? Return to Lender......Page 426
Presentation and Analysis......Page 427
Using Bank Accounts......Page 431
The Imprest Petty Cash System......Page 432
Reconciliation of Bank Balances......Page 433
APPENDIX 7B: Impairments of Receivables......Page 436
Impairment Loss Example......Page 437
Recording Impairment Losses......Page 438
FASB Codification......Page 439
IFRS Insights......Page 464
Inventories in the Crystal Ball......Page 470
Classification......Page 472
Inventory Cost Flow......Page 473
Inventory Control......Page 475
Basic Issues in Inventory Valuation......Page 476
Consigned Goods......Page 477
Special Sales Agreements......Page 478
Effect of Inventory Errors......Page 479
Period Costs......Page 482
What Do the Numbers Mean? You May Need a Map......Page 483
Specific Identification......Page 484
Average Cost......Page 485
First-In, First-Out (FIFO)......Page 486
Last-In, First-Out (LIFO)......Page 487
LIFO Reserve......Page 488
What Do the Numbers Mean? Comparing Apples to Apples......Page 489
LIFO Liquidation......Page 490
Dollar-Value LIFO......Page 491
Comparison of LIFO Approaches......Page 496
Major Advantages of LIFO......Page 497
Major Disadvantages of LIFO......Page 498
Basis for Selection of Inventory Method......Page 499
Inventory Valuation Methods—Summary Analysis......Page 501
FASB Codification......Page 504
What Do Inventory Changes Tell Us?......Page 528
Lower-of-Cost-or-Market......Page 530
Ceiling and Floor......Page 531
How Lower-of-Cost-or-Market Works......Page 532
Methods of Applying Lower-of-Cost-or-Market......Page 533
Recording "Market" Instead of Cost......Page 534
Use of an Allowance......Page 535
What Do the Numbers Mean? "Put It in Reverse"......Page 536
Valuation at Net Realizable Value......Page 537
Valuation Using Relative Sales Value......Page 538
Purchase Commitments—A Special Problem......Page 539
The Gross Profit Method of Estimating Inventory......Page 541
Computation of Gross Profit Percentage......Page 542
Evaluation of Gross Profit Method......Page 543
Retail Inventory Method......Page 544
Retail-Method Concepts......Page 545
Retail Inventory Method with Markups and Markdowns—Conventional Method......Page 546
Evaluation of Retail Inventory Method......Page 549
Presentation of Inventories......Page 550
Analysis of Inventories......Page 551
Stable Prices—LIFO Retail Method......Page 554
Fluctuating Prices—Dollar-Value LIFO Retail Method......Page 555
Subsequent Adjustments Under Dollar-Value LIFO Retail......Page 556
Changing from Conventional Retail to LIFO......Page 557
FASB Codification......Page 559
IFRS Insights......Page 581
Where Have All the Assets Gone?......Page 590
Acquisition of Property, Plant, and Equipment......Page 592
Cost of Buildings......Page 593
Self-Constructed Assets......Page 594
Interest Costs During Construction......Page 595
What Do the Numbers Mean? What's in Your Interest?......Page 600
Deferred-Payment Contracts......Page 601
Lump-Sum Purchases......Page 602
Issuance of Stock......Page 603
Exchanges of Nonmonetary Assets......Page 604
Accounting for Contributions......Page 609
Costs Subsequent to Acquisition......Page 610
What Do the Numbers Mean? Disconnected......Page 611
Improvements and Replacements......Page 612
Repairs......Page 613
Sale of Plant Assets......Page 614
Miscellaneous Problems......Page 615
FASB Codification......Page 617
Here Come the Write-Offs......Page 640
Factors Involved in the Depreciation Process......Page 642
Methods of Depreciation......Page 644
Special Depreciation Methods......Page 647
What Do the Numbers Mean? Decelerating Depreciation......Page 649
Special Depreciation Issues......Page 650
Recognizing Impairments......Page 653
Measuring Impairments......Page 654
Impairment of Assets to Be Disposed of......Page 655
Depletion......Page 656
Establishing a Depletion Base......Page 657
Write-Off of Resource Cost......Page 658
Continuing Controversy......Page 659
Presentation of Property, Plant, Equipment, and Natural Resources......Page 661
Analysis of Property, Plant, and Equipment......Page 663
Tax Lives (Recovery Periods)......Page 666
Tax Depreciation Methods......Page 667
Example of MACRS System......Page 668
FASB Codification......Page 669
IFRS Insights......Page 689
Are We There Yet?......Page 700
Valuation......Page 702
Amortization of Intangibles......Page 703
What Do the Numbers Mean? Definitely Indefinite......Page 704
Marketing-Related Intangible Assets......Page 705
Artistic-Related Intangible Assets......Page 706
Technology-Related Intangible Assets......Page 707
What Do the Numbers Mean? Patent Battles......Page 708
What Do the Numbers Mean? The Value of a Secret Formula......Page 709
Goodwill......Page 710
Impairment of Limited-Life Intangibles......Page 713
Impairment of Goodwill......Page 714
Impairment Summary......Page 715
Research and Development Costs......Page 716
Identifying R&D Activities......Page 717
Costs Similar to R&D Costs......Page 718
Conceptual Questions......Page 721
Presentation of Research and Development Costs......Page 722
Diversity in Practice......Page 726
Accounting for Capitalized Software Costs......Page 727
Setting Standards for Software Accounting......Page 728
FASB Codification......Page 730
IFRS Insights......Page 748
Now You See It, Now You Don’t......Page 756
What Is a Current Liability?......Page 758
Notes Payable......Page 759
Short-Term Obligations Expected to Be Refinanced......Page 761
Customer Advances and Deposits......Page 763
Unearned Revenues......Page 764
Sales Taxes Payable......Page 765
Employee-Related Liabilities......Page 766
Compensated Absences......Page 768
Gain Contingencies......Page 771
Likelihood of Loss......Page 772
Litigation, Claims, and Assessments......Page 774
Guarantee and Warranty Costs......Page 775
Premiums and Coupons......Page 777
Environmental Liabilities......Page 778
Self-Insurance......Page 781
Presentation of Current Liabilities......Page 782
Presentation of Contingencies......Page 784
Current Ratio......Page 785
Acid-Test Ratio......Page 786
FASB Codification......Page 788
IFRS Insights......Page 809
Bonds versus Notes?......Page 818
Types and Ratings of Bonds......Page 820
What Do the Numbers Mean? All About Bonds......Page 821
Valuation of Bonds Payable—Discount and Premium......Page 822
Bonds Issued at Par on Interest Date......Page 824
Bonds Issued at Discount or Premium on Interest Date......Page 825
Bonds Issued Between Interest Dates......Page 826
Bonds Issued at a Discount......Page 827
Bonds Issued at a Premium......Page 828
Accruing Interest......Page 829
Costs of Issuing Bonds......Page 830
Extinguishment of Debt......Page 831
What Do the Numbers Mean? Your Debt Is Killing My Equity......Page 832
Notes Issued at Face Value......Page 833
Zero-Interest-Bearing Notes......Page 834
Interest-Bearing Notes......Page 835
Notes Issued for Property, Goods, or Services......Page 836
Choice of Interest Rate......Page 837
Mortgage Notes Payable......Page 838
Fair Value Controversy......Page 839
Different Forms......Page 840
Rationale......Page 841
Presentation of Long-Term Debt......Page 842
Analysis of Long-Term Debt......Page 844
APPENDIX 14A: Troubled-Debt Restructurings......Page 846
Transfer of Assets......Page 847
Modification of Terms......Page 848
Example 1—No Gain for Debtor......Page 849
Example 2—Gain for Debtor......Page 851
Concluding Remarks......Page 852
FASB Codification......Page 853
IFRS Insights......Page 871
It’s a Global Market......Page 878
Capital Stock or Share System......Page 880
Variety of Ownership Interests......Page 881
Corporate Capital......Page 882
Issuance of Stock......Page 883
Reacquisition of Shares......Page 887
What Do the Numbers Mean? Signals to Buy?......Page 888
What Do the Numbers Mean? Not So Good Anymore......Page 891
Features of Preferred Stock......Page 892
Accounting for and Reporting Preferred Stock......Page 893
Dividend Policy......Page 894
Types of Dividends......Page 895
Stock Split......Page 900
What Do the Numbers Mean? Splitsville......Page 901
Disclosure of Restrictions on Retained Earnings......Page 903
Presentation......Page 904
Analysis......Page 906
Dividend Preferences......Page 909
Book Value per Share......Page 910
FASB Codification......Page 912
IFRS Insights......Page 931
Kicking the Habit......Page 940
Accounting for Convertible Debt......Page 942
Induced Conversions......Page 943
Convertible Preferred Stock......Page 944
Stock Warrants......Page 945
Stock Warrants Issued with Other Securities......Page 946
Stock Compensation Plans......Page 949
Stock-Option Plans......Page 951
Restricted Stock......Page 953
Employee Stock-Purchase Plans......Page 954
Debate over Stock-Option Accounting......Page 955
SECTION 2 Computing Earnings per Share......Page 957
Preferred Stock Dividends......Page 958
Weighted-Average Number of Shares Outstanding......Page 959
Comprehensive Example......Page 961
Earnings per Share—Complex Capital Structure......Page 962
Diluted EPS—Convertible Securities......Page 963
Diluted EPS—Options and Warrants......Page 965
Contingent Issue Agreement......Page 966
Antidilution Revisited......Page 967
EPS Presentation and Disclosure......Page 968
Summary of EPS Computation......Page 969
SARS—Share-Based Liability Awards......Page 972
Stock-Appreciation Rights Example......Page 973
APPENDIX 16B: Comprehensive Earnings per Share Example......Page 975
Diluted Earnings per Share......Page 976
FASB Codification......Page 980
IFRS Insights......Page 1001
What to Do?......Page 1010
SECTION 1 Investments in Debt Securities......Page 1012
Held-to-Maturity Securities......Page 1013
Available-for-Sale Securities......Page 1015
Example: Single Security......Page 1016
Sale of Available-for-Sale Securities......Page 1017
Financial Statement Presentation......Page 1018
Trading Securities......Page 1019
SECTION 2 Investments in Equity Securities......Page 1020
Holdings of Less Than 20%......Page 1021
Available-for-Sale Securities......Page 1022
Equity Method......Page 1024
What Do the Numbers Mean? Who's in Control Here?......Page 1026
Fair Value Option......Page 1027
Impairment of Value......Page 1028
Reclassification Adjustments......Page 1029
Comprehensive Example......Page 1031
Transfers Between Categories......Page 1033
Summary of Reporting Treatment of Securities......Page 1034
What Do the Numbers Mean? More Disclosure, Please......Page 1035
Defining Derivatives......Page 1037
Speculators and Arbitrageurs......Page 1038
Basic Principles in Accounting for Derivatives......Page 1039
Example of Derivative Financial Instrument—Speculation......Page 1040
Differences between Traditional and Derivative Financial Instruments......Page 1042
Derivatives Used for Hedging......Page 1043
Fair Value Hedge......Page 1044
Cash Flow Hedge......Page 1046
Embedded Derivatives......Page 1048
Qualifying Hedge Criteria......Page 1049
Summary of Derivatives Accounting......Page 1050
Fair Value Hedge......Page 1051
Financial Statement Presentation of an Interest Rate Swap......Page 1053
Controversy and Concluding Remarks......Page 1054
What About GAAP?......Page 1056
Consolidation of Variable-Interest Entities......Page 1057
What Is Happening in Practice?......Page 1058
Disclosure of Fair Value Information: Financial Instruments—No Fair Value Option......Page 1059
Disclosure of Fair Values: Impaired Assets or Liabilities......Page 1061
FASB Codification......Page 1062
IFRS Insights......Page 1084
It’s Back......Page 1100
Current Environment......Page 1102
Guidelines for Revenue Recognition......Page 1103
Departures from the Sale Basis......Page 1104
Revenue Recognition at Point of Sale (Delivery)......Page 1105
Sales with Discounts......Page 1106
Sales with Right of Return......Page 1107
Sales with Buybacks......Page 1109
Principal-Agent Relationships......Page 1110
What Do the Numbers Mean? Grossed Out......Page 1111
What Do the Numbers Mean? No Take-Backs......Page 1113
Multiple-Deliverable Arrangements......Page 1114
Summary of Revenue Recognition Methods......Page 1116
Revenue Recognition Before Delivery......Page 1117
Percentage-of-Completion Method......Page 1118
Completed-Contract Method......Page 1123
Long-Term Contract Losses......Page 1124
What Do the Numbers Mean? Less Conservative......Page 1127
Installment-Sales Method......Page 1128
Cost-Recovery Method......Page 1137
Deposit Method......Page 1138
Concluding Remarks......Page 1139
APPENDIX 18A: Revenue Recognition for Franchises......Page 1141
Example of Entries for Initial Franchise Fee......Page 1142
Bargain Purchases......Page 1143
Disclosures of Franchisors......Page 1144
FASB Codification......Page 1145
IFRS Insights......Page 1170
How Much Is Enough?......Page 1178
Fundamentals of Accounting for Income Taxes......Page 1180
Future Taxable Amounts and Deferred Taxes......Page 1181
What Do the Numbers Mean? "Real Liabilities"......Page 1184
Future Deductible Amounts and Deferred Taxes......Page 1185
What Do the Numbers Mean? "Real Assets"......Page 1187
Income Statement Presentation......Page 1188
Specific Differences......Page 1189
Tax Rate Considerations......Page 1192
What Do the Numbers Mean? Global Tax Rates......Page 1193
Loss Carryforward......Page 1194
Loss Carryforward Example......Page 1195
What Do the Numbers Mean? NOLs: Good News or Bad?......Page 1199
Balance Sheet......Page 1200
Income Statement......Page 1201
Uncertain Tax Positions......Page 1204
Review of the Asset-Liability Method......Page 1205
First Year—2011......Page 1209
Computing Deferred Income Taxes—End of 2011......Page 1210
Deferred Tax Expense (Benefit) and the Journal Entry to Record Income Taxes—2011......Page 1211
Financial Statement Presentation—2011......Page 1212
Second Year—2012......Page 1213
Computing Deferred Income Taxes—End of 2012......Page 1214
Financial Statement Presentation—2012......Page 1215
FASB Codification......Page 1216
IFRS Insights......Page 1235
Where Have All the Pensions Gone?......Page 1244
Nature of Pension Plans......Page 1246
Defined Benefit Plan......Page 1247
What Do the Numbers Mean? Which Plan Is Right for You?......Page 1248
Alternative Measures of the Liability......Page 1249
Components of Pension Expense......Page 1251
2012 Entries and Worksheet......Page 1254
Amortization of Prior Service Cost (PSC)......Page 1256
2013 Entries and Worksheet......Page 1257
Gain or Loss......Page 1259
What Do the Numbers Mean? Pension Costs Ups and Downs......Page 1260
2014 Entries and Worksheet......Page 1263
Reporting Pension Plans in Financial Statements......Page 1265
Within the Financial Statements......Page 1266
Within the Notes to the Financial Statements......Page 1268
Example of Pension Note Disclosure......Page 1269
2015 Entries and Worksheet—A Comprehensive Example......Page 1271
Special Issues......Page 1272
Concluding Observations......Page 1275
Accounting Guidance......Page 1277
Differences Between Pension Benefits and Healthcare Benefits......Page 1278
Postretirement Benefits Accounting Provisions......Page 1279
Obligations Under Postretirement Benefits......Page 1280
Illustrative Accounting Entries......Page 1281
2012 Entries and Worksheet......Page 1282
2013 Entries and Worksheet......Page 1283
Actuarial Assumptions and Conceptual Issues......Page 1285
What Do the Numbers Mean? GASB Who?......Page 1287
FASB Codification......Page 1288
IFRS Insights......Page 1310
More Companies Ask, “Why Buy?”......Page 1324
Who Are the Players?......Page 1326
Advantages of Leasing......Page 1328
Conceptual Nature of a Lease......Page 1329
Accounting by the Lessee......Page 1330
Capitalization Criteria......Page 1331
Capital Lease Method (Lessee)......Page 1334
What Do the Numbers Mean? Restatements on the Menu......Page 1337
Comparison of Capital Lease with Operating Lease......Page 1338
What Do the Numbers Mean? Are You Liable?......Page 1339
Accounting by the Lessor......Page 1340
Classification of Leases by the Lessor......Page 1341
Direct-Financing Method (Lessor)......Page 1343
Operating Method (Lessor)......Page 1345
Residual Values......Page 1346
Sales-Type Leases (Lessor)......Page 1352
Bargain-Purchase Option (Lessee)......Page 1355
Current versus Noncurrent......Page 1356
Disclosing Lease Data......Page 1357
Lease Accounting—Unresolved Problems......Page 1359
APPENDIX 21A: Examples of Lease Arrangements......Page 1363
Example 1: Harmon, Inc.......Page 1364
Example 3: Mendota Truck Co.......Page 1365
Example 4: Appleland Computer......Page 1366
Determining Asset Use......Page 1367
Sale-Leaseback Example......Page 1368
FASB Codification......Page 1370
IFRS Insights......Page 1391
In the Dark......Page 1402
Changes in Accounting Principle......Page 1404
Retrospective Accounting Change Approach......Page 1406
What Do the Numbers Mean? Change Management......Page 1408
Impracticability......Page 1415
Prospective Reporting......Page 1417
Disclosures......Page 1418
Correction of Errors......Page 1419
Example of Error Correction......Page 1421
Summary of Accounting Changes and Correction of Errors......Page 1423
What Do the Numbers Mean? Can I Get My Money Back?......Page 1424
Motivations for Change of Accounting Method......Page 1425
Balance Sheet Errors......Page 1426
Counterbalancing Errors......Page 1427
Noncounterbalancing Errors......Page 1429
Comprehensive Example: Numerous Errors......Page 1430
What Do the Numbers Mean? Guard the Financial Statements!......Page 1432
Preparation of Financial Statements with Error Corrections......Page 1433
Dividends in Excess of Earnings......Page 1437
Change to the Equity Method......Page 1438
FASB Codification......Page 1440
IFRS Insights......Page 1464
Show Me the Money......Page 1470
Usefulness of the Statement of Cash Flows......Page 1472
Classification of Cash Flows......Page 1473
What Do the Numbers Mean? How's My Cash Flow?......Page 1474
Steps in Preparation......Page 1475
First Example—2011......Page 1476
Step 2: Determine Net Cash Flow from Operating Activities......Page 1477
Step 3: Determine Net Cash Flows from Investing and Financing Activities......Page 1479
Statement of Cash Flows—2011......Page 1480
Step 2: Determine Net Cash Flow from Operating Activities—Indirect Method......Page 1481
Step 3: Determine Net Cash Flows from Investing and Financing Activities......Page 1482
Third Example—2013......Page 1483
Step 1: Determine the Change in Cash......Page 1484
Step 2: Determine Net Cash Flow from Operating Activities—Indirect Method......Page 1485
Statement of Cash Flows—2013......Page 1486
Sources of Information for the Statement of Cash Flows......Page 1487
Direct Method—An Example......Page 1488
Direct versus Indirect Controversy......Page 1493
What Do the Numbers Mean? Not What It Seems......Page 1494
Equity Method of Accounting......Page 1495
Losses and Gains......Page 1496
Extraordinary Items......Page 1497
Indirect Method......Page 1498
Direct Method......Page 1499
Other Working Capital Changes......Page 1500
Significant Noncash Transactions......Page 1501
SECTION 3 Use of a Worksheet......Page 1503
Preparation of the Worksheet......Page 1505
Accounts Receivable (Net)......Page 1507
Land......Page 1508
Other Noncash Charges or Credits......Page 1509
Final Reconciling Entry......Page 1510
Preparation of Final Statement......Page 1512
FASB Codification......Page 1514
IFRS Insights......Page 1541
High-Quality Financial Reporting—Always in Fashion......Page 1548
Full Disclosure Principle......Page 1550
Differential Disclosure......Page 1551
Accounting Policies......Page 1552
Common Notes......Page 1553
Disclosure of Special Transactions or Events......Page 1555
Post-Balance-Sheet Events (Subsequent Events)......Page 1557
Reporting for Diversified (Conglomerate) Companies......Page 1558
Interim Reports......Page 1564
Auditor's Report......Page 1569
Management's Reports......Page 1572
Reporting on Financial Forecasts and Projections......Page 1574
Internet Financial Reporting......Page 1577
Fraudulent Financial Reporting......Page 1578
What Do the Numbers Mean? Disclosure Overload......Page 1580
Criteria for Making Accounting and Reporting Choices......Page 1581
Perspective on Financial Statement Analysis......Page 1583
Ratio Analysis......Page 1584
Limitations of Ratio Analysis......Page 1585
Comparative Analysis......Page 1587
Percentage (Common-Size) Analysis......Page 1588
FASB Codification......Page 1590
IFRS Insights......Page 1609
Index......Page 1621