by Hopkins, Halsey
| ISBN: 978-1-61853-312-8 | Copyright 2020
Our goal in writing this book was to satisfy the needs of today’s accounting students by providing the most contemporary, relevant, engaging, and student-oriented textbook available. We think that we have accomplished that objective by maintaining a conceptually rigorous discussion of the material in an intuitive and student-friendly style. Prior to writing this book, we both taught advanced financial accounting for many years, and we both felt that the structure and format of available textbooks contributed to the difficulties that our students have had in learning the material. several examples come to mind:
This book is the product of extensive market research including focus groups, market surveys, class tests, manuscript reviews, and interviews with faculty from across the country. We are grateful for the feedback from faculty who reviewed, and students who studied, early drafts of our text.
Advanced Accounting is intended for use in undergraduate and graduate accounting programs that include a course in advanced accounting as part of the curriculum. This book is especially written for advanced accounting courses in which an intuitive understanding of the material, in addition to accounting mechanics, is emphasized. Feedback from students who used our text, and subsequently completed the uniform CPA exam, has been extremely positive. They report that they felt well-prepared for the portions of the exam relating to advanced financial accounting topics.
We introduce topics by discussing the intuition behind accounting standards before discussing the mechanics of the accounting process. In addition, we intentionally deemphasize memorization of journal entry mechanics. We believe that this approach allows students to better understand the material and to develop relevant transferrable knowledge.
Although our text emphasizes the intuition underlying the consolidation process, we also introduce the C-E-A-D-I (pronounced “seedy”) consolidation journal entry sequence to assist students in learning the mechanics of consolidation. The sequence systematically eliminates the book value of subsidiary equity (C, E), establishes the fair value adjustments for subsidiary net assets (A, D), and eliminates intercompany transactions and balances (I). Over the years, we’ve observed that this easy-to-remember mnemonic improves students’ understanding of consolidations and allows for easier recall of each step of the consolidation adjustment process.
In recognition of the fact that, in practice, companies apply procedures that blend the cost and equity methods of pre-consolidation bookkeeping, the authors have incorporated extensive cost method coverage in the relevant chapters and assignment material. The 4th edition continues to focus on the full equity method in the consolidations chapters, but now the cost method is also discussed and illustrated. All cost-method discussion is clearly marked with a labeled, colored bar in the margins.
We wrote our text after implementation of the FASB’s Codification and we integrated the Codification throughout, including end-of-chapter problem assignments. Unlike many advanced accounting textbooks, we cite passages of the Codification frequently so that students can become familiar with the actual language of the standards, not just the authors' summary of the standards. This also allows students to easily find the relevant passages on their own. In addition, to familiarize students with the Codification search engine and to better develop their research skills, we also include numerous FASB Codification-related research assignments in our end-of-chapter problem sets.
The primary purpose of the Advanced Accounting course at most universities it to prepare accounting majors for the CPA exam. To provide students with relevant practice, we have included a number of multiple choice questions in each chapter that have been adapted from past CPA exams. We are grateful to the AiCPA for granting us permission to use former CPA exam questions for this purpose.
Accounting students must become familiar with IFRS. Fortunately, the current accounting standards relating to the main topic of the book business combinations and consolidation were written jointly by the FASB and the IASB, and are 99% equivalent. In addition, other standards (e.g., segment reporting) are similar, but have key differences. In the text, we discuss the IFRS equivalent of accounting standards and highlight the differences between the two sets of accounting standards when they occur. These discussions are identified with the IFRS icon.
Advanced accounting is a challenging topic. We have adopted a number of techniques in our book to make the material relevant and engaging to students. These techniques include:
Each chapter incorporates a “focus company” for special emphasis and demonstration. We chose companies that illustrate the topic of the chapter so that students can learn the material within context. In addition, our chapters on governmental accounting are written around a small new england town that is large enough to effectively communicate the concepts of governmental accounting, yet small enough not to obscure those concepts in unnecessary complexity.
We believe that an important part of the learning process involves the application of concepts to realworld data. We include references to actual footnotes in the body of our text and also include a number of end-of-chapter problems that are written around actual footnote disclosures. These problems allow students to think about accounting concepts more broadly (i.e., less mechanically) and from the perspective of the users of financial statements.
We provide a number of Practice insight Boxes resulting from interviews with practicing accountants and financial managers. These boxes provide students with insight into issues that accountants face in the real world, and with a glimpse into the types of decisions that practicing accountants must make.
Advanced accounting concepts can be challenging. To reinforce concepts presented in each chapter and to ensure student comprehension, we include topic reviews that require students to recall and apply the financial accounting techniques and concepts described in each chapter.
Revised Chapter 1
focuses entirely on non-business-combination investment accounting. All references to business combinations have
been moved to Chapter 2.
Revised Chapter 2 includes
the FASB’s new definition of a business (i.e., from ASU 2017-01) and includes
improved discussion of the differences in accounting for a business combination
and an asset acquisition that does not qualify as a business combination. In
addition, 4E includes new coverage of Pushdown
Revised Chapter 3
includes coverage of the new, simplified one-step goodwill impairment model
(i.e., ASU 2017-04). Because the simplified model is not required for all
companies until 2022, we also continue to cover the two-step model goodwill
Revised Chapter 6 includes
new “intuition boxes” for the Variable Interest Entity consolidations
Revised Chapter 7
has been rewritten to include improved focus on foreign currency denominated
assets and liabilities, and the related hedge-accounting issues. We also
include discussion of the FASB’s new hedge accounting rules (ASU 2017-12).
Revised Chapter 9
includes emphasis on the
reconciliations between government wide and fund-based financial statements to
explain each reconciliation entry. This should help students better understand
the objectives of these reconciliations and the information they contain.
Revised Chapter 10 incorporates the changes in the
Not-For-Profit Financial Reporting Framework.
Road Map: Each chapter opens with a grid
that identifies each learning objective for the chapter, the related pages, eLecture
and Guided Example videos, and end of chapter assignments. This allows students
and faculty to quickly grasp the chapter contents and to efficiently navigate
to the desired topic.
myBusinessCourse (MBC): Bob Halsey has revised and recorded the eLectures and Guided
Examples in MBC. In addition, even more problems from the book are now
available in MBC.
End-of-chapter Assignments: All real-world assignments and all stylized assignments
throughout the book have been refreshed with new scenarios, numbers, and