Intermediate accounting

For courses in intermediate accounting. Help students think like accountants -- from the first day of class through their careers Thinking like an accountant isn't just rote memorization of accounting rules. Rather, it's developing the judgment and decision-making skills needed to form accounting estimates and evaluate financial statements critically. With its focus on conceptual framework fundamentals and critical thinking, Gordon, Raedy, and Sannella's Intermediate Accounting, 2nd Edition gives readers the opportunity to develop problem-solving skills, apply their judgment, and work with real company financials. After mastering these essential skills, students will be ready to pass the CPA exam, and able to think like accountants. Also available with MyLab Accounting By combining trusted authors' content with digital tools and a flexible platform, MyLab personalizes the learning experience and improves results for each student. 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If you would like to purchase both the physical text and MyLab Accounting, search for: 0134833104 / 9780134833101 Intermediate Accounting Plus MyLab Accounting with Pearson eText -- Access Card Package, 2/e Package consists of: 0134730372 / 9780134730370 Intermediate Accounting 0134732383 / 9780134732381 MyLab Accounting with Pearson eText -- Access Card -- for Intermediate Accounting Cover......Page 1 About the Authors......Page 6 Brief Contents......Page 8 Contents......Page 10 Preface......Page 27 Introduction......Page 40 Financial Information......Page 41 Economic Entity......Page 42 Financial Statement User Groups......Page 43 Legal, Economic, Political, and Social Environment......Page 45 The Importance of Understanding International Accounting Standards......Page 47 Standard Setting......Page 48 History of Global Standard Setting: IFRS......Page 51 Interview: Daniel J. Noll, AICPA......Page 52 The Global Standard-Setting Structure: IFRS......Page 53 Trends in Standard Setting......Page 54 Rules versus Principles-Based Standards......Page 55 Fair Value Measurements......Page 56 Summary by Learning Objectives......Page 57 Questions......Page 58 Brief Exercises......Page 59 Exercises......Page 60 Introduction......Page 62 Conceptual Framework Components......Page 63 Interview: Paul Pacter, Former Member of IASB......Page 65 Fundamental Characteristics......Page 66 Enhancing Characteristics......Page 68 Elements of Financial Reporting......Page 69 Elements......Page 71 Elements: IFRS......Page 73 General Recognition Principles......Page 75 Revenue and Expense Recognition......Page 76 Bases of Measurement......Page 77 Recognition and Measurement: IFRS......Page 79 Cash versus Accrual Accounting......Page 80 Assumptions in Financial Reporting......Page 81 Assumptions in Financial Reporting: IFRS......Page 82 Summary by Learning Objectives......Page 83 Brief Exercises......Page 86 Exercises......Page 90 Introduction......Page 94 Judgment and Financial Statement Comparisons......Page 95 Judgment-Related Disclosures......Page 96 Key Judgment Areas in Practice......Page 100 Factors Influencing Management Behavior......Page 101 Cognitive Biases......Page 102 Authoritative Literature......Page 103 Authoritative Literature: IFRS......Page 106 Interview: Robert Herz, Chairman, FASB (Retired)......Page 107 Step 2: Identify the Issue: What is the Research Question?......Page 108 Step 6: Communicate the Results of the Research......Page 109 Applying the Research Process......Page 110 Summary by Learning Objectives......Page 114 Brief Exercises......Page 117 Exercises......Page 119 Judgment Cases......Page 120 Basis for Conclusions Cases......Page 122 Appendix A: Structure of U.S. GAAP Codification......Page 124 Appendix B: IFRS Standards......Page 127 Introduction......Page 130 The Accounting Equation......Page 131 Step 2: Journalize the Transactions......Page 136 Accounts......Page 137 Journal Entries......Page 138 Step 3: Post to the General Ledger......Page 140 The T-Account......Page 143 Step 4: Prepare the Unadjusted Trial Balance......Page 144 Deferrals......Page 145 Accruals......Page 149 Step 6: Prepare the Adjusted Trial Balance......Page 152 Step 7: Prepare Financial Statements......Page 154 Step 8: Close Temporary Accounts......Page 156 Step 9: Prepare Post-Closing Trial Balance......Page 157 Comprehensive Example......Page 158 Interview: John Foristall, ShoeBuy......Page 174 Summary by Learning Objectives......Page 175 Multiple-Choice Questions Becker Professional Education......Page 179 Brief Exercises......Page 181 Exercises......Page 183 Problems......Page 189 Appendix A: Alternative Treatment of Deferred Revenues and Expenses......Page 198 Appendix B: Using a Worksheet......Page 200 Appendix C: Reversing Entries......Page 207 Introduction......Page 210 Income Statement Terminology......Page 211 THE CONCEPTUAL FRAMEWORK CONNECTION: Usefulness and Limitations of the Income Statements......Page 212 JUDGMENTS IN ACCOUNTING: Earnings Management......Page 213 Statement of Net Income Elements......Page 215 Statement of Net Income Classifications......Page 216 Multiple-Step Net Income Statement......Page 217 Condensed Statement of Net Income......Page 218 Single-Step Statement of Net Income......Page 220 Statement of Net Income Presentation: IFRS......Page 222 Income from Continuing Operations......Page 223 Non-Operating Income......Page 225 Characteristics of a Discontinued Operation......Page 226 Discontinued Operations Reporting Requirements......Page 227 Discontinued Operations: IFRS......Page 231 Net Income, Noncontrolling Interest and Earnings per Share......Page 232 Statement of Comprehensive Income Elements......Page 233 Statement of Comprehensive Income Format......Page 234 Statement of Stockholders’ Equity Accounts......Page 237 Interview: Greg Tierney, MillerCoors......Page 238 Summary by Learning Objectives......Page 242 Questions......Page 246 Multiple-Choice Questions Becker Professional Education......Page 247 Brief Exercises......Page 248 Exercises......Page 253 Problems......Page 259 Judgment Cases......Page 263 Financial Statement Analysis Cases......Page 264 Surfing the Standards Cases......Page 265 Basis for Conclusions Cases......Page 266 Appendix A: Financial Statement Analysis......Page 267 Appendix B: Profitability Analysis......Page 270 Introduction......Page 274 THE CONCEPTUAL FRAMEWORK CONNECTION: Usefulness and Limitations of the Balance Sheet......Page 275 Balance Sheet Classifications......Page 276 Assets......Page 277 Liabilities......Page 278 Stockholders’ Equity......Page 279 Asset Presentation......Page 280 Balance Sheet Format......Page 281 The Statement of Cash Flows......Page 283 Statement of Cash Flows Classifications......Page 285 Classification of Dividends, Interest, and Taxes: IFRS......Page 287 Format for Cash Flows from Operating Activities......Page 288 Financial Statement Articulation......Page 291 Notes to the Financial Statements......Page 294 THE CONCEPTUAL FRAMEWORK CONNECTION: Notes to the Financial Statements......Page 295 Interview: Michael Cohen, CohnReznick......Page 300 Management Discussion and Analysis......Page 301 Auditors’ Report......Page 302 Management Report......Page 303 Summary by Learning Objectives......Page 304 Questions......Page 309 Multiple-Choice Questions Becker Professional Education......Page 310 Brief Exercises......Page 311 Exercises......Page 319 Problems......Page 325 Judgment Cases......Page 332 Financial Statement Analysis Case......Page 333 Surfing the Standards Cases......Page 334 Basis for Conclusions Cases......Page 336 Reporting Cash Flows from Operating Activities: Indirect Method......Page 338 Reporting Cash Flows from Operating Activities: Direct Method......Page 341 Reporting Cash Flows from Investing and Financing Activities......Page 345 Liquidity......Page 347 Solvency......Page 348 DuPont Analysis......Page 350 Introduction......Page 354 Time Value of Money in Accounting......Page 355 Compound Interest......Page 356 Effective Interest Rates......Page 357 Single-Sum Problems......Page 358 Future Value of a Single Sum......Page 359 Present Value of a Single Sum......Page 362 Other Single-Sum Problems......Page 366 Annuities......Page 370 Future Value of Ordinary Annuities......Page 371 Future Value of an Annuity Due......Page 374 Present Value of Ordinary Annuities......Page 378 Present Value of an Annuity Due......Page 381 Other Annuity Problems......Page 385 Future Value of a Deferred Ordinary Annuity......Page 390 Present Value of a Deferred Ordinary Annuity......Page 391 THE CONCEPTUAL FRAMEWORK CONNECTION: Present Value of Expected Cash Flows......Page 392 Interview: Peter Biché, Monumental Sports & Entertainment......Page 393 Computing Bond Issue Proceeds......Page 394 Summary by Learning Objectives......Page 396 Brief Exercises......Page 398 Exercises......Page 399 Problems......Page 402 Appendix A: Time Value of Money Factor Tables......Page 405 Introduction......Page 412 Revenue Recognition Overview......Page 413 THE CONCEPTUAL FRAMEWORK CONNECTION: Revenue Recognition......Page 414 Contract Criteria......Page 415 Failure to Meet Contract Criteria......Page 416 Identify the Contract(s) with a Customer: IFRS......Page 417 Step 2: Identify the Performance Obligations in the Contract......Page 418 Variable Consideration and Constraining Estimates of Variable Consideration......Page 420 Significant Financing Component......Page 423 Noncash Consideration......Page 424 Consideration Payable to a Customer......Page 425 Standalone Selling Price......Page 426 Standalone Selling Price Estimation Methods......Page 427 Standalone Selling Price Exceptions......Page 428 Transfer over Time......Page 432 Summary of the Five-Step Revenue Recognition Process......Page 434 JUDGMENTS IN ACCOUNTING: Revenue Recognition......Page 436 Accounting for Long-Term Contracts......Page 440 Percentage-of-Completion Method......Page 441 Completed-Contract Method......Page 446 Right-to-Return Sales......Page 449 Consignment Sales......Page 450 Other Principal-Agent Transactions......Page 452 Bill-and-Hold Arrangements......Page 453 Contracts with Customers......Page 454 Interview: Michael Hall, KPMG......Page 456 FINANCIAL STATEMENT ANALYSIS: Comparison of the Percentage-of-Completion and Completed-Contract Methods......Page 457 Summary by Learning Objectives......Page 460 Questions......Page 465 Multiple-Choice Questions Becker Professional Education......Page 466 Brief Exercises......Page 468 Exercises......Page 471 Problems......Page 475 Financial Statement Analysis Case......Page 480 Basis for Conclusions Case......Page 481 Introduction......Page 482 Restricted Cash and Compensating Balances......Page 483 Required Disclosures for Restricted Cash and Cash Equivalents......Page 484 Trade Discounts and Volume Discounts......Page 485 Sales Discounts......Page 486 THE CONCEPTUAL FRAMEWORK CONNECTION: Accounting for Uncollectible Accounts......Page 489 The Allowance Method......Page 490 Aging of Accounts Receivable......Page 491 Uncollectible Account Write-Off......Page 494 Subsequent Recoveries......Page 495 JUDGMENTS IN ACCOUNTING: Subsequent Measurements of Accounts Receivable......Page 496 Financing with Accounts Receivable......Page 497 Pledging and Assigning Accounts Receivable......Page 498 Factoring Accounts Receivable......Page 499 Securitizations......Page 502 Stated Interest Rate Equal to the Market Rate......Page 503 No Stated Interest Rate or Stated Interest Rate Less Than the Market Rate......Page 504 Disclosures for Accounts Receivable and Notes Receivable......Page 507 FINANCIAL STATEMENT ANALYSIS: Operating Cycle Analysis......Page 508 Interview: Dalton Smart, Merck & Co.......Page 513 Summary by Learning Objectives......Page 514 Multiple-Choice Questions Becker Professional Education......Page 517 Brief Exercises......Page 518 Exercises......Page 522 Problems......Page 529 Judgment Cases......Page 534 Surfing the Standards Cases......Page 537 Basis for Conclusions Case......Page 538 Appendix A: Internal Controls over Cash......Page 539 Format for the Bank Reconciliation......Page 540 Introduction......Page 546 Types of Inventory......Page 547 Inventory Systems......Page 548 Inventory Costing: Units and Costs Included......Page 551 Costs Included in Inventory......Page 552 Purchase Discounts......Page 553 Inventory Cost-Flow Assumptions......Page 555 Specific Identification Method......Page 557 Moving-Average Method......Page 558 First-In, First-Out Method......Page 560 Last-In, First-Out Method......Page 562 Comparison of the Moving-Average, FIFO, and LIFO Methods......Page 563 The LIFO Reserve and LIFO Effect......Page 565 LIFO Liquidations......Page 567 Dollar-Value LIFO......Page 569 JUDGMENTS IN ACCOUNTING: The LIFO Effect......Page 573 The Lower-of-Cost-or-Market Rule......Page 574 Lower-of-Cost-or-Market Rule Method......Page 575 Lower-of-Cost-or-Market Rule: IFRS......Page 581 JUDGMENTS IN ACCOUNTING: The Lower-of-Cost-or-Market Rule......Page 582 Interview: Barbara J. Wight, Taylor Guitars......Page 583 Basic Retail Method......Page 584 Retail Method Terminology......Page 585 The Conventional Retail Inventory Method......Page 586 Gross Profit Method of Estimating Inventory......Page 588 Inventory Disclosures......Page 589 FINANCIAL STATEMENT ANALYSIS: Conversion from LIFO to FIFO......Page 590 Summary by Learning Objectives......Page 593 Multiple-Choice Questions Becker Professional Education......Page 597 Brief Exercises......Page 599 Exercises......Page 603 Problems......Page 609 Judgment Cases......Page 614 Financial Statement Analysis Cases......Page 616 Surfing the Standards Cases......Page 618 Basis for Conclusions Cases......Page 620 Basic LIFO Retail Inventory Method......Page 622 Dollar-Value LIFO Retail Inventory Method......Page 623 Introduction......Page 626 THE CONCEPTUAL FRAMEWORK CONNECTION: Property, Plant, and Equipment Measurement......Page 627 PPE Categories......Page 628 Initial Measurement of Basket Purchases......Page 629 Initial Measurement with Deferred Payment Arrangements......Page 631 Interest Capitalization......Page 632 JUDGMENTS IN ACCOUNTING: The Initial Measurement of Property, Plant, and Equipment......Page 642 Subsequent Expenditures......Page 643 THE CONCEPTUAL FRAMEWORK CONNECTION: The Cost Allocation Process......Page 644 Asset Derecognition: Sale......Page 652 Disclosures of Property, Plant, and Equipment......Page 653 IFRS Disclosures......Page 654 Finite-Life Intangible Assets......Page 655 Initial Measurement of Intangible Assets......Page 656 Goodwill......Page 657 Research and Development Costs......Page 659 Amortization Method......Page 663 Derecognition of Intangible Assets......Page 664 Interview: Stephen J. Cosgrove, Johnson & Johnson......Page 665 Disclosures of Intangible Assets......Page 666 IFRS Intangible Asset Disclosure......Page 667 FINANCIAL STATEMENT ANALYSIS: Long-Term Fixed Assets......Page 668 Summary by Learning Objectives......Page 670 Questions......Page 674 Multiple-Choice Questions Becker Professional Education......Page 675 Brief Exercises......Page 676 Exercises......Page 678 Problems......Page 686 Financial Statement Analysis Case......Page 690 Surfing the Standards Cases......Page 692 Basis for Conclusions Cases......Page 693 Exchanges with Commercial Substance......Page 694 Exchanges without Commercial Substance and Cash Received......Page 696 IFRS Accounting for Nonmonetary Exchanges......Page 698 Costs Included in Natural Resources......Page 699 Depletion......Page 700 IFRS Costs Included in Natural Resources......Page 703 Introduction......Page 704 Categories and Steps Associated with the Impairment of Long-Term Operating Assets......Page 705 When to Test for Impairment......Page 706 Two-Step Impairment Test......Page 708 Measurement Subsequent to Impairment......Page 711 One-Step Impairment Test......Page 712 Measurement Subsequent to Impairment......Page 713 Asset Grouping......Page 714 One-Step Impairment Test......Page 715 JUDGMENTS IN ACCOUNTING: For Impaired Long-Term Operating Assets......Page 717 Impairment Test......Page 719 Impairment Test......Page 727 Impaired Asset Disclosure Requirements......Page 731 Impaired Asset Disclosure Requirements: IFRS......Page 734 Recording Long-Term Operating Assets Held for Sale or Disposal......Page 735 Interview: Jack Markey, Quest Diagnostics......Page 738 FINANCIAL STATEMENT ANALYSIS: Long-Term Operating Assets with Departures from Historical Cost......Page 739 Summary by Learning Objectives......Page 741 Multiple-Choice Questions Becker Professional Education......Page 744 Brief Exercises......Page 745 Exercises......Page 748 Problems......Page 752 Judgment Cases......Page 756 Financial Statement Analysis Case......Page 759 Surfing the Standards Cases......Page 761 Basis for Conclusions Cases......Page 763 The Revaluation Model......Page 764 Derecognition after a Revaluation......Page 771 JUDGMENTS IN ACCOUNTING: Revaluation under IFRS......Page 772 Required Disclosures for Revaluation of Long-Term Operating Assets......Page 773 Introduction......Page 774 Accounts Payable and Trade Notes Payable......Page 775 Unearned Revenues......Page 776 Gift Cards......Page 777 Deposits......Page 780 Compensated Absences......Page 781 Footnote Disclosures: Operating Liabilities......Page 784 Accounting for Asset Retirement Obligations......Page 785 Footnote Disclosures: Asset Retirement Obligations......Page 786 Asset Retirement Obligations: IFRS......Page 787 Loss Contingency......Page 788 Recognition and Measurement of Loss Contingencies......Page 789 Accounting for Loss Contingencies......Page 790 Accounting for Litigation......Page 791 Accounting for Litigation: IFRS......Page 792 Accounting for Warranty Costs......Page 793 Accounting for Premiums......Page 796 JUDGMENTS IN ACCOUNTING: For Contingencies......Page 799 Interview: Cathy Engelbert, Deloitte & Touche LLP......Page 800 Required Disclosures for Contingencies: IFRS......Page 801 FINANCIAL STATEMENT ANALYSIS: More on Liquidity......Page 802 Summary by Learning Objectives......Page 804 Questions......Page 807 Multiple-Choice Questions Becker Professional Education......Page 808 Brief Exercises......Page 809 Exercises......Page 811 Problems......Page 813 Judgment Cases......Page 816 Financial Statement Analysis Case......Page 817 Surfing the Standards Cases......Page 818 Basis for Conclusions Cases......Page 819 Unemployment Taxes......Page 821 Income Taxes Withheld......Page 822 Introduction......Page 826 Short-Term Notes Payable......Page 827 Long-Term Notes Payable: Term Loans......Page 828 Long-Term Notes Payable: Installment Loans......Page 829 Long-Term Notes Payable: Stated Rate Less than Market Rate......Page 832 Credit Ratings......Page 834 Bond Indenture......Page 835 Bond Pricing......Page 836 Bonds Issued at Par......Page 839 Overview of Bonds Payable Issued at a Discount or Premium......Page 840 Accounting for Bonds Payable Issued at a Premium......Page 841 Accounting for Bonds Payable Issued at a Discount......Page 843 Bonds Issued between Interest Dates......Page 848 Bond Issue Costs......Page 851 Early Retirement of Bonds Payable......Page 852 Convertible Bonds......Page 853 Accounting for Convertible Bonds......Page 854 Beneficial Conversion Options......Page 855 Accounting for Convertible Bonds: IFRS......Page 857 JUDGMENTS IN ACCOUNTING: Convertible Bonds......Page 858 Accounting for Stock Warrants......Page 859 Accounting for Stock Warrant: IFRS......Page 861 Short-Term Debt Expected to Be Refinanced......Page 862 Obligations Callable by Creditor......Page 865 Fair Value Option Accounting at Initial Recognition......Page 866 Disclosures for Financing Liabilities......Page 867 Fair Value Disclosures......Page 868 FINANCIAL STATEMENT ANALYSIS: Credit Risk......Page 869 Interview: Carolyn Slaski, Ernst & Young LLP......Page 872 Summary by Learning Objectives......Page 873 Multiple-Choice Questions Becker Professional Education......Page 877 Brief Exercises......Page 879 Exercises......Page 883 Problems......Page 886 Judgment Cases......Page 890 Surfing the Standards Cases......Page 891 Basis for Conclusions Cases......Page 892 Appendix A: The Straight-Line Method of Amortization......Page 893 Straight-Line Amortization: IFRS......Page 896 Introduction......Page 898 Components of Stockholders’ Equity......Page 899 Overview of Common Stock......Page 900 Accounting for Common Stock Issuances......Page 901 Stock Splits......Page 904 Purpose of Share Repurchases......Page 905 Accounting for Treasury Stock Transactions......Page 906 Accounting for Share Retirements......Page 909 Overview of Preferred Stock......Page 911 Features of Preferred Shares......Page 913 Types of Dividends......Page 918 Accounting for Cash Dividends......Page 919 Accounting for Stock Dividends......Page 920 JUDGMENTS IN ACCOUNTING: Stock Dividends......Page 923 Prior-Period Adjustments......Page 924 Components of Comprehensive Income......Page 925 Reporting Other Comprehensive Income......Page 926 Stockholders’ Equity Disclosures......Page 927 Rights and Privileges of Classes of Stock......Page 928 Interview: Robert Laux, International Integrated Reporting Council......Page 929 Disclosures: IFRS......Page 930 FINANCIAL STATEMENT ANALYSIS: Valuation Ratios......Page 931 Summary by Learning Objectives......Page 934 Questions......Page 936 Multiple Choice Questions Becker Professional Education......Page 937 Brief Exercises......Page 938 Exercises......Page 939 Problems......Page 944 Judgment Cases......Page 948 Financial Statement Analysis Case......Page 951 Basis for Conclusions Cases......Page 952 Introduction......Page 954 Investments in Equity Securities......Page 955 Key Questions for Investments in Debt and Equity Securities......Page 956 Held-to-Maturity Debt Securities......Page 957 Trading Debt Securities......Page 961 Available-for-Sale Debt Securities......Page 963 Presentation of Other Comprehensive Income: Reclassification Adjustments for Available-for-Sale Debt Investments......Page 968 Transfers between Classifications......Page 970 Accounting for Debt Investments under IFRS......Page 971 Investments in Equity Securities: No Significant Influence......Page 972 Equity Investments With No Significant Influence: Readily Determinable Fair Value......Page 973 Equity Investments With No Significant Influence: No Readily Determinable Fair Values......Page 976 JUDGMENTS IN ACCOUNTING: Equity Investments with No Significant Influence and No Readily Determinable Fair Values......Page 977 Accounting for Equity Investments with No Significant Influence under IFRS......Page 978 The Equity Method......Page 979 Long-Term Notes Receivable......Page 984 Stated Interest Rate Equal to the Market Rate......Page 985 Stated Interest Rate Less than the Market Rate......Page 987 IFRS Accounting for Note Receivable......Page 990 The Fair Value Option for Reporting Investments......Page 991 Debt Securities......Page 992 Fair Value Measurement Disclosures......Page 994 Fair Value Disclosures......Page 995 Interview: Thomas Angell, WithumSmith + Brown......Page 996 FINANCIAL STATEMENT ANALYSIS: Investments in Debt Securities and Equity Securities with No Significant Influence......Page 997 Summary by Learning Objectives......Page 999 Multiple-Choice Questions Becker Professional Education......Page 1002 Brief Exercises......Page 1004 Exercises......Page 1006 Problems......Page 1010 Financial Statement Analysis Case......Page 1015 Surfing the Standards Case......Page 1017 Basis for Conclusions Cases......Page 1018 Accounting for Impairments of Debt Investment Measured at Amortized Cost......Page 1019 Accounting for Impairment of Available-for-Sale Debt Investments......Page 1021 Accounting for Impairments of Equity Securities with No Readily Determinable Fair Value......Page 1023 Accounting for Impairments under IFRS: Debt Securities Reported at Amortized Cost or Fair Value through Other Comprehensive Income......Page 1025 Introduction......Page 1030 No Differences between Book and Tax Reporting......Page 1031 Permanent Differences between Book and Tax Reporting......Page 1032 Accounting for Permanent Differences......Page 1033 Temporary Differences between Book and Tax Reporting......Page 1034 Deferred Tax Assets and Liabilities......Page 1036 Temporary Difference Reversal......Page 1040 THE CONCEPTUAL FRAMEWORK CONNECTION: Temporary Differences......Page 1044 Treatment of Deferred Tax Assets......Page 1045 Treatment of Deferred Tax Assets: IFRS......Page 1048 JUDGMENTS IN ACCOUNTING: Temporary Book-Tax Differences......Page 1050 Accounting for Changes in Tax Rates......Page 1051 Effect of Tax Rate Changes on Deferred Tax Accounts......Page 1052 Accounting for Tax Rate Changes: IFRS......Page 1053 Carrybacks and Carryforwards under U.S.Tax Law......Page 1054 Accounting for an NOL Carryback......Page 1055 Accounting for an NOL Carryforward......Page 1056 Assessing NOL Carryforward Realizability......Page 1060 Uncertain Tax Positions......Page 1061 Accounting for Uncertain Tax Positions......Page 1062 JUDGMENTS IN ACCOUNTING: Uncertain Tax Positions......Page 1064 Income Statement Presentation......Page 1066 Tax Rate Reconciliation......Page 1068 Income Statement Disclosures: IFRS......Page 1069 Interview: Laurie Wax, RSM US LLP......Page 1070 FINANCIAL STATEMENT ANALYSIS: Accounting for Income Taxes......Page 1071 Summary by Learning Objectives......Page 1073 Multiple-Choice Questions Becker Professional Education......Page 1076 Brief Exercises......Page 1079 Exercises......Page 1081 Problems......Page 1087 Financial Statement Analysis Case......Page 1093 Surfing the Standards Cases......Page 1095 Basis for Conclusions Cases......Page 1096 Appendix A: Comprehensive Book-Tax Difference Problem......Page 1098 Introduction......Page 1102 Disadvantages of Leasing for the Lessee......Page 1103 Understanding the Basics of Lease Accounting......Page 1104 Separating Components in a Lease Contract......Page 1105 Allocating Consideration in a Lease Contract......Page 1106 Criteria for Classification......Page 1107 Lease Payments and Discount Rates......Page 1110 IFRS Lease Classification......Page 1112 THE CONCEPTUAL FRAMEWORK CONNECTION: Lease Classification......Page 1114 Initial Measurement of an Operating Lease: Lessee......Page 1115 Subsequent Measurement of an Operating Lease: Lessee......Page 1117 Operating Lease with Residual Values: Lessee Guaranteed Residual Value......Page 1120 Short-Term Policy Election: Lessee......Page 1121 Operating Lease: Lessor Accounting......Page 1122 Initial and Subsequent Measurement of Finance Leases: Lessee......Page 1124 Finance Lease with Residual Values: Lessee......Page 1128 Initial Measurement of a Sales-Type Lease......Page 1130 Subsequent Measurement of a Sales-Type Lease......Page 1134 Residual Values in a Sales-Type Lease......Page 1135 Initial Measurement of a Direct Financing Lease......Page 1137 Subsequent Measurement of a Direct Financing Lease......Page 1139 IFRS Accounting for Leases: Lessor......Page 1141 JUDGMENTS IN ACCOUNTING: For Leases......Page 1142 Interview: Chad Soares, PricewaterhouseCoopers LLP......Page 1143 Lessee-Disclosure Requirements......Page 1144 Lessor-Disclosure Requirements......Page 1145 FINANCIAL STATEMENT ANALYSIS: Operating Leases versus Finance Leases for the Lessee......Page 1146 Summary by Learning Objectives......Page 1149 Questions......Page 1154 Multiple-Choice Questions Becker Professional Education......Page 1155 Brief Exercises......Page 1156 Exercises......Page 1158 Problems......Page 1163 Financial Statement Analysis Case......Page 1168 Surfing the Standards Cases......Page 1169 Basis for Conclusions Cases......Page 1170 Accruing Interest on Leases......Page 1172 Leasehold Improvements......Page 1173 Executory Costs......Page 1174 Purchase Options......Page 1177 Deferred Profit in Direct Financing Leases......Page 1178 Variable Lease Payments......Page 1181 Comprehensive Problem: Leasing Complexities......Page 1184 Introduction......Page 1190 Stock Option Terminology......Page 1191 THE CONCEPTUAL FRAMEWORK CONNECTION: Stock-Based Compensation......Page 1192 Estimates in Accounting for Stock-Based Compensation......Page 1193 Issuance of Equity-Classified Awards......Page 1194 Change in the Estimated Forfeiture Rate......Page 1196 Exercise of Equity-Classified Awards......Page 1197 Equity-Classified Awards: IFRS......Page 1198 Issuance of Liability-Classified Awards......Page 1199 Fair Value Adjustments......Page 1200 Exercise of Liability-Classified Awards......Page 1201 Stock Appreciation Rights......Page 1202 Restricted Stock Plans......Page 1204 Employee Stock Purchase Plans......Page 1206 Stock-Based Compensation Disclosures......Page 1207 THE CONCEPTUAL FRAMEWORK CONNECTION: Stock-Based Compensation......Page 1209 Types of Pension Plans......Page 1210 Measures of the Actuarially Determined Defined-Benefit Pension Obligation......Page 1211 Factor 1: Service Cost......Page 1213 Factor 2: Prior Service Costs......Page 1214 Factor 3: Interest on the PBO......Page 1215 Factor 4: Expected Return on Pension Plan Assets......Page 1216 Factor 5: Current-Year Net Gains and Losses......Page 1217 Factor 6: Funding the Plan......Page 1219 Accounting for Defined-Benefit Pension Plans: IFRS......Page 1220 JUDGMENTS IN ACCOUNTING: Defined-Benefit Pension Plans......Page 1225 Defined-Benefit Pension Plan Disclosure Requirements......Page 1226 FINANCIAL STATEMENT ANALYSIS: Defined-Benefit Pension Plan......Page 1228 Interview: Peter Sayre, Prudential Insurance......Page 1232 Summary by Learning Objectives......Page 1233 Multiple Choice Questions Becker Professional Education......Page 1236 Brief Exercises......Page 1238 Exercises......Page 1241 Problems......Page 1246 Financial Statement Analysis Cases......Page 1251 Surfing the Standards Cases......Page 1252 Basis for Conclusions Cases......Page 1253 Appendix A: Comprehensive Illustration of Accounting for Defined-Benefit Pension Plans......Page 1254 Introduction......Page 1260 Basic EPS Numerator......Page 1261 Basic EPS Denominator......Page 1262 JUDGMENTS IN ACCOUNTING: Presentation of EPS......Page 1264 Diluted Earnings per Share......Page 1265 Convertible Debt......Page 1266 Convertible Preferred Stock......Page 1271 Options and Warrants......Page 1272 Antidilutive Convertible Securities......Page 1274 Antidilution Sequencing......Page 1276 Antidilution with a Net Loss from Continuing Operations......Page 1277 Earnings per Share Presentation and Disclosures......Page 1278 Comprehensive Example: EPS Calculation, Antidilution Sequencing, and Disclosures......Page 1280 FINANCIAL STATEMENT ANALYSIS: EPS......Page 1284 Interview: Michael H. Dolan, Duff & Phelps, LLC......Page 1287 Summary by Learning Objectives......Page 1288 Multiple-Choice Questions Becker Professional Education......Page 1290 Brief Exercises......Page 1291 Exercises......Page 1293 Problems......Page 1295 Judgment Case......Page 1299 Financial Statement Analysis