Modern Advanced Accounting

Title
Contents
1. Ethical Issues in Advanced Accounting
	Scope of Chapter
	What Is Fraudulent Financial Reporting?
	An Example of Fraudulent Financial Reporting
	Ethical Standards for Preparers of Financial Statements and Financial Reports
		Significant Events in the Establishment of Ethical Standards for Management Accountants and Financial Executives
		Analysis of Ethical Standards for Management Accountants and Financial Executives
		Concluding Observations
	Appendix 1IMA Standards of Ethical Conduct for Members
	Appendix 2 FEI Code of Ethics
	Appendix 3 AICPA Code of Professional Conduct
	Review Questions
	Exercises
	Cases
PART ONE ACCOUNTING FOR PARTNERSHIPS AND BRANCHES
	2. Partnerships: Organization and Operation
		Scope of Chapter
		Organization of a Limited Liability Partnership
			Characteristics of an LLP
			Deciding between an LLP and a Corporation
			Is the LLP a Separate Entity?
			The Partnership Contract
			Ledger Accounts for Partners
			Loans to and from Partners
			Valuation of Investments by Partners
		Income-Sharing Plans for Limited Liability Partnerships
			Partners’ Equity in Assets versus Share in Earnings
			Division of Net Income or Loss
			Financial Statements for an LLP
			Correction of Partnership Net Income of Prior Period
		Changes in Ownership of Limited Liability Partnerships
			Accounting for Changes in Partners
			Accounting and Managerial Issues
			Admission of a New Partner
			Acquisition of an Interest by Payment to One or More Partners
			Investment in Partnership by New Partner
			Bonus or Goodwill Allowed to Existing Partners
			Bonus or Goodwill Allowed to New Partner
			Retirement of a Partner
		Limited Partnerships
			Accounting for Limited Partnerships
			Financial Statements for Limited Partnerships
		SEC Enforcement Actions Dealing with Wrongful Application of Accounting Standards for Partnerships
			AAER 202
			AAER 214
		Review Questions
		Exercises
		Cases
		Problems
		Chapter
	3. Partnership Liquidation and Incorporation; Joint Ventures
		Liquidation of a Partnership
			The Meaning of Liquidation
			Division of Losses and Gains during Liquidation
			Distribution of Cash or Other Assets to Partners
		Payments to Partners of an LLP After All Noncash Assets Realized
			Equity of Each Partner Is Sufficient to Absorb Loss from Realization
			Equity of One Partner Is Not Sufficient to Absorb That Partner’s Share of Loss from Realization
			Equities of Two Partners Are Not Sufficient to Absorb Their Shares of Loss from Realization
			Partnership Is Insolvent but Partners Are Solvent
			General Partnership Is Insolvent and Partners Are Insolvent
		Installment Payments to Partners
			General Principles Guiding Installment Payments
			Determining Appropriate Installment Payments to Partners
			Preparation of a Cash Distribution Program
			Withholding of Cash for Liabilities and Liquidation Costs
			Liquidation of Limited Partnerships
		Incorporation of a Limited Liability Partnership
		Joint Ventures
			Present-Day Joint Ventures
			Accounting for a Corporate or LLC Joint Venture
			Accounting for an Unincorporated Joint Venture
		SEC Enforcement Actions Dealing with Wrongful Application of Accounting Standards for Joint Ventures
		Review Questions
		Exercises
		Cases
		Problems
		Scope of Chapter
	4. Accounting for Branches; Combined Financial Statements
		Scope of Chapter
		Branches and Divisions
		Start-Up Costs of Opening New Branches
		Accounting System for a Branch
			Reciprocal Ledger Accounts
			Expenses Incurred by Home Office and Allocated to Branches
			Alternative Methods of Billing Merchandise Shipments to Branches
			Separate Financial Statements for Branch and for Home Office
			Combined Financial Statements for Home Office and Branch
			Working Paper for Combined Financial Statements
			Billing of Merchandise to Branches at Prices above Home Office Cost
			Working Paper When Billings to Branches Are at Prices above Cost
			Treatment of Beginning Inventories Priced above Cost
			Reconciliation of Reciprocal Ledger Accounts
			Transactions between Branches
		SEC Enforcement Action Dealing with Wrongful Application of Accounting Standards for Divisions
		Review Questions
		Exercises
		Cases
		Problems
PART TWO BUSINESS COMBINATIONS AND CONSOLIDATED FINANCIAL STATEMENTS
	5. Business Combinations
		Scope of Chapter
		Business Combinations: Why and How?
			Antitrust Considerations
			Methods for Arranging Business Combinations
			Establishing the Price for a Business Combination
		Purchase Method of Accounting for Business Combinations
			Determination of the Combinor
			Computation of Cost of a Combinee
			Allocation of Cost of a Combinee
			Illustration of Purchase Accounting for Statutory Merger, with Goodwill
			Illustration of Purchase Accounting for Acquisition of Net Assets, with Bargain-Purchase Excess
			Other Topics in Accounting for Business Combinations
		Appraisal of Accounting Standards for Business Combinations
		SEC Enforcement Actions Dealing with Wrongful Application of Accounting Standards for Business Combinations
			AAER 38
			AAER 275
			AAER 598
			AAERs 601, 606, and 607
		Review Questions
		Exercises
		Cases
		Problems
	6. Consolidated Financial Statements: On Date of Business Combination
		Scope of Chapter
		Parent Company–Subsidiary Relationships
			Nature of Consolidated Financial Statements
			Should All Subsidiaries Be Consolidated?
			The Meaning of Controlling Interest
			Criticism of Traditional Concept of Control
			FASB’s Proposed Redefinition of Control
			The Problem of Variable Interest Entities
		Consolidation of Wholly Owned Subsidiary on Date of Business Combination
		Consolidation of Partially Owned Subsidiary on Date of Business Combination
			Nature of Minority Interest
			Consolidated Balance Sheet for Partially Owned Subsidiary
			Alternative Methods for Valuing Minority Interest and Goodwill
			Bargain-Purchase Excess in Consolidated Balance Sheet
			Disclosure of Consolidation Policy
			International Accounting Standard 27
			Advantages and Shortcomings of Consolidated Financial Statements
			“Push-Down Accounting” for a Subsidiary
		SEC Enforcement Actions Dealing with Wrongful Application of Accounting Standards for Consolidated Financial Statements
			AAER 34
			AAER 1762
		Review Questions
		Exercises
		Cases
		Problems
	7. Consolidated Financial Statements: Subsequent to Date of Business Combination
		Scope of Chapter
		Accounting for Operating Results of Wholly Owned Subsidiaries
			Equity Method
			Cost Method
			Choosing between Equity Method and Cost Method
			Illustration of Equity Method for Wholly Owned Subsidiary for First Year after Business Combination
			Illustration of Equity Method for Wholly Owned Subsidiary for Second Year after Business Combination
		Accounting for Operating Results of Partially Owned Subsidiaries
			Illustration of Equity Method for Partially Owned Subsidiary for First Year after Business Combination
			Illustration of Equity Method for Partially Owned Subsidiary for Second Year after Business Combination
			Concluding Comments on Equity Method of Accounting
		Appendix Cost Method for Partially Owned Subsidiary
		Review Questions
		Exercises
		Cases
		Problems
	8. Consolidated Financial Statements: Intercompany Transactions
		Scope of Chapter
		Accounting for Intercompany Transactions Not Involving Profit (Gain) or Loss
			Loans on Notes or Open Accounts
			Leases of Property under Operating Leases
			Rendering of Services
			Income Taxes Applicable to Intercompany Transactions
			Summary: Intercompany Transactions Not Involving Profit or Loss
		Accounting for Intercompany Transactions Involving Profit (Gain) or Loss
			Importance of Eliminating or Including Intercompany Profits (Gains) and Losses
		Intercompany Sales of Merchandise
			Intercompany Sales of Merchandise at Cost
			Unrealized Intercompany Profit in Ending Inventories
			Intercompany Profit in Beginning and Ending Inventories
			Intercompany Profit in Inventories and Amount of Minority Interest
			Should Net Profit or Gross Profit Be Eliminated?
		Intercompany Sales of Plant Assets
			Intercompany Gain on Sale of Land
			Intercompany Gain on Sale of Depreciable Plant Asset
		Intercompany Lease of Property under Capital/ Sales-Type Lease
		Intercompany Sales of Intangible Assets
		Acquisition of Affiliate’s Bonds
			Illustration of Acquisition of Affiliate’s Bonds
			Accounting for Gain in Subsequent Years
			Reissuance of Intercompany Bonds
		Illustration of Effect of Intercompany Profits (Gains) on Minority Interest
		Comprehensive Illustration of Working Paper for Consolidated Financial Statements
		SEC Enforcement Action Dealing with Wrongful Accounting for an Intercompany Account
			AAER 992
		Review Questions
		Exercises
		Cases
		Problems
	9. Consolidated Financial Statements: Income Taxes, Cash Flows, and Installment Acquisitions
		Scope of Chapter
		Income Taxes in Business Combinations and Consolidations
			Income Taxes Attributable to Current Fair Values of a Combinee’s Identifiable Net Assets
			Income Taxes Attributable to Undistributed Earnings of Subsidiaries
			Income Taxes Attributable to Intercompany Profits (Gains)
		Consolidated Statement of Cash Flows
			Illustration of Consolidated Statement of Cash Flows
		Installment Acquisition of Subsidiary
			Illustration of Installment Acquisition of Parent Company’s Controlling Interest
			Parent Company’s Journal Entries for Installment Acquisition
			Working Paper for Consolidated Financial Statements
		Review Questions
		Exercises
		Cases
		Problems
	10. Consolidated Financial Statements: Special Problems
		Scope of Chapter
		Changes in Parent Company’s Ownership Interest in a Subsidiary
			Parent Company Acquisition of Minority Interest
			Parent Company Sale of a Portion of Its Subsidiary Common Stockholdings
			Subsidiary’s Issuance of Additional Shares of Common Stock to the Public
			Subsidiary’s Issuance of Additional Shares of Common Stock to Parent Company
		Subsidiary with Preferred Stock Outstanding
			Illustration of Minority Interest in Subsidiary with Preferred Stock
			Preferred Stock Considerations subsequent to Date of Business Combination
		Stock Dividends Distributed by a Subsidiary
			Illustration of Subsidiary Stock Dividend
		Treasury Stock Transactions of a Subsidiary
			Illustration of Treasury Stock Owned by Subsidiary on Date of Business Combination
			Illustration of Treasury Stock Acquired by Subsidiary subsequent to Business Combination
		Indirect Shareholdings and Parent Company’s Common Stock Owned by a Subsidiary
			Indirect Shareholdings
			Parent Company’s Common Stock Owned by a Subsidiary
			Concluding Comments on Special Problems
		Review Questions
		Exercises
		Cases
		Problems
PART THREE INTERNATIONAL ACCOUNTING: REPORTING OF SEGMENTS, FOR INTERIM PERIODS,AND TO THE SEC
	11. International Accounting Standards; Accounting for Foreign Currency Transactions
		Scope of Chapter
		International Accounting Standards Board
		Accounting for Foreign Currency Transactions
			FASB Statements No. 52 and No. 133
			Transactions Involving Foreign Currencies
			Purchase of Merchandise from a Foreign Supplier
			Foreign Currency Transaction Gains and Losses
			Sale of Merchandise to a Foreign Customer
			Loan Payable Denominated in a Foreign Currency
			Loan Receivable Denominated in a Foreign Currency
			Conclusions regarding Transactions Involving Foreign Currencies
			Forward Contracts
			International Accounting Standards 21 and 39
			Disclosures regarding Foreign Currency Transactions
		Review Questions
		Exercises
		Cases
		Problems
	12. Translation of Foreign Currency Financial Statements
		Scope of Chapter
		Functional Currency
			Alternative Methods for Translating Foreign Entities’ Financial Statements
			Standards for Translation Established by the Financial Accounting Standards Board
		Remeasurement of a Foreign Entity’s Accounts
			Illustration of Remeasurement of a Foreign Entity’s Account Balances
		Translation of a Foreign Entity’s Financial Statements
			Translation of Financial Statements of Foreign Influenced Investee
			Translation and Consolidation of Financial Statements of Foreign Subsidiary
			Summary: Remeasurement and Translation
			Other Aspects of Foreign Currency Translation
			International Accounting Standard 21
			Appraisal of Accounting Standards for Foreign Currency Translation
		Review Questions
		Exercises
		Cases
		Problems
	13. Reporting for Components; Interim Reports; Reporting for the SEC
		Scope of Chapter
		Reporting for Components of an Entity
			Background of Components Reporting
			Proposal to Improve Segment Reporting
			Allocation of Nontraceable Expenses to Operating Segments
			SEC Requirements for Segment Information
			Reporting the Disposal of a Business Segment
			International Accounting Standard 14
			SEC Enforcement Action Dealing with Wrongful Application of Accounting Standards for Operating Segments
		Interim Financial Reports
			Problems in Interim Financial Reports
			APB Opinion No. 28
			Reporting Accounting Changes in Interim Periods
			Conclusions on Interim Financial Reports
			IAS 34, “Interim Financial Reporting”
			SEC Enforcement Actions Dealing with Wrongful Application of Accounting Standards for Interim Financial Reports
		Reporting for the SEC
			Nature of Reporting to the SEC
			Organization and Functions of the SEC
			Interaction between SEC and FASB
			The SEC and the Public Company Accounting Oversight Board (PCAOB)
		Appendix Excerpts from the 2003 Annual Report of The McGraw-Hill Companies, Inc.
		Review Questions
		Exercises
		Cases
		Problems
PART FOUR ACCOUNTING FOR FIDUCIARIES
	14. Bankruptcy: Liquidation and Reorganization
		Scope of Chapter
		The Bankruptcy Code
		Bankruptcy Liquidation
			Debtor’s (Voluntary) Petition
			Creditor’s (Involuntary) Petition
			Unsecured Creditors with Priority
			Property Claimed as Exempt
			Role of Court in Liquidation
			Role of Creditors
			Role of Trustee
			Discharge of Debtor
			Role of Accountant in Bankruptcy Liquidation
			Financial Condition of Debtor Enterprise: The Statement of Affairs
			Estimated Amounts to Be Recovered by Each Class of Creditors
			Accounting and Reporting for Trustee
		Bankruptcy Reorganization
			Appointment of Trustee or Examiner
			Plan of Reorganization
			Accounting for a Reorganization
			Disclosure of Reorganization
		Review Questions
		Exercises
		Cases
		Problems
	15. Estates and Trusts
		Scope of Chapter
		Legal and Accounting Aspects of Estates
			Provisions of Uniform Probate Code Governing Estates
			Provisions of Revised Uniform Principal and Income Act Governing Estates
			Illustration of Accounting for an Estate
		Legal and Accounting Aspects of Trusts
			Provisions of Uniform Probate Code Governing Trusts
			Provisions of Revised Uniform Principal and Income Act Governing Trusts
			Illustration of Accounting for a Trust
		Review Questions
		Exercises
		Cases
		Problems
PART FIVE ACCOUNTING FOR NONBUSINESS ORGANIZATIONS
	16. Nonprofit Organizations
		Scope of Chapter
		Accounting Standards for Nonprofit Organizations
		Characteristics of Nonprofit Organizations
		Fund Accounting by Nonprofit Organizations
			Unrestricted Fund
			Restricted Fund
			Endowment Fund
			Agency Fund
			Annuity and Life Income Funds
			Loan Fund
			Plant Fund
		Financial Statements of Nonprofit Organizations
			Concluding Observations on Accounting for Nonprofit Organizations
		Appendix Excerpts from the 2003 Annual Report of The Kenneth T. and Eileen L. Norris Foundation
		Review Questions
		Exercises
		Cases
		Problems
	17. Governmental Entities: General Fund
		Scope of Chapter
		Nature of Governmental Entities
		Objectives of Financial Reporting for Governmental Entities
		Accounting and Reporting Standards for Governmental Entities
			The Governmental Financial Reporting Entity
			Funds: The Principal Accounting Unit for Governmental Entities
			The Modified Accrual Basis of Accounting
			Recording the Budget
		Accounting and Reporting for a Governmental Entity’s General Fund
			Illustration of Accounting for a General Fund
			Trial Balance at End of Fiscal Year for a General Fund
			Financial Statements for a General Fund
			Closing Entries for a General Fund
		Review Questions
		Exercises
		Cases
		Problems
	18. Governmental Entities: Other Governmental Funds and Account Groups
		Scope of Chapter
		Other Governmental Funds
			Accounting and Reporting for Special Revenue Funds
			Accounting and Reporting for Capital Projects Funds
			Accounting and Reporting for Debt Service Funds
			Permanent Funds
		General Capital Assets and General Long-Term Debt Account Groups
			Accounting and Reporting for General Capital Assets Account Group
			Accounting and Reporting for General Long-Term Debt Account Group
			Capital Leases of Governmental Entities
			Accounting for Special Assessment Bonds
		Review Questions
		Exercises
		Cases
		Problems
	19. Governmental Entities: Proprietary Funds, Fiduciary Funds, and Comprehensive Annual Financial Report
		Scope of Chapter
		Proprietary Funds
			Accounting and Reporting for Enterprise Funds
			Accounting and Reporting for Internal Service Funds
			Applicability of FASB Pronouncements to Proprietary Funds
		Fiduciary Funds
			Accounting and Reporting for Agency Funds
			Accounting and Reporting for Private-Purpose Trust Funds
			Accounting and Reporting for Pension Trust Funds
			Accounting and Reporting for Investment Trust Funds
		Comprehensive Annual Financial Report of Governmental Entities
			GASB Statement No. 33—A Preliminary Step
			Subsequent Steps—GASB Statements No. 35, 37, 38, and 41
			Composition of a Governmental Entity’s Comprehensive Annual Financial Report
		SEC Enforcement Action Dealing with Wrongful Application of Accounting and Reporting Standards for Governmental Entity
			AAER 970
		Review Questions
		Exercises
		Cases
		Problems
Glossary
Index