by Hanlon, Hodder, Nelson, Roulstone
ISBN: 978-1-61853-207-7 | Copyright 2019
Welcome to the first edition of Intermediate Accounting, uniquely designed within a system of interactive resources that are tailored to the needs of today's students. As the learning styles of students have evolved, we do not feel that the market has fully embraced the study habits of today’s students and the power of technology in the learning process. The emphasis in our approach is to provide students with a demo and a review problem on each deliberately selected, key learning objective. In this way, students practice each learning objective with the added opportunity to practice the exact demos electronically in myBusinessCourse, our online homework platform. Our approach steers away from dense text (which the average student is not reading) and moves to an active-learning approach where content is delivered in short bursts followed by immediate practice. Because each learning outcome for every chapter is self-contained, faculty have the option to pick and choose learning objectives allowing complete flexibility.
Integral to this active-learning approach are the resources provided to students allowing them to be successful in mastering the demo problems. We noted the need in the market for a direct incorporation of authoritative support. Although some references may be included in a footnote to a chapter in the current market, direct citations are rarely seen. In our approach, we provide succinct yet thorough, to-the-point explanations in each self-contained learning objective along with direct citations of the most relevant references from the Codification. We feel this best prepares the typical intermediate accounting student who will often reference and cite the authoritative standards in practice. This novel approach of combining an active-learning approach supplemented with real life authoritative guidance reflects our combined experiences in preparing intermediate accounting students for life in practice.
Intermediate Accounting is intended for use following the first financial accounting course at either the undergraduate or graduate level. This book supports an intermediate accounting series offered to accounting and some finance majors, typically in a two-course sequence (three-course series in some cases). The topics in intermediate accounting are relevant to approximately 70% of the Financial Accounting Reporting (FAR) section of the Uniform CPA Examination. This rigorous exam ensures that only qualified individuals become licensed as U.S. Certified Public Accountants (CPAs).
We have adopted a straightforward effective layout throughout every chapter of the book. We have included carefully crafted learning objectives that are not extraneous or all-encompassing. Each key learning objective is clearly identified with a distinct red banner and is followed by its own overview, demo, and review problem.
In fact, each learning objective represents a separate learning module, allowing students and faculty to break down complex topics into manageable subtopics. We believe that students will appreciate this style of learning uniquely adopted in Intermediate Accounting because of the current trend in learning preferences. Students prefer to learn by doing with convenient access explanations and authoritative references for help in the process. For additional support, students have access to short videos for each demo.
Each chapter opens with a grid that identifies each learning objective for the chapter, the related pages, demonstrations, review applications, and end of chapter assignments. This allows students and faculty to quickly grasp the chapter contents and to efficiently navigate to the desired topic.
Following each learning objective is a brief explanation of the topic with visual references (diagrams), when helpful. We also include an overview box for each learning objective to provide students with a quick overview of key topics. For topics that we felt relevant authoritative guidance was important, we included an excerpt from the accounting guidance. This presentation of the accounting guidance minimizes authors’ biases and places both students and faculty in a unique authoritative position. Our approach incorporates ASC Glossary definitions whenever possible and terminology that is common in the Codification such as the terms recognition, measurement, derecognition, and disclosure. References to authoritative guidance are distinctly highlighted with black block text as shown below.
We believe that a presentation focused on demos will inspire the contemporary college learner. Demos are included for each learning objective to illustrate the accounting concept discussed. The blue text, color-coded solutions are provided as this is the student’s first exposure to the relevant topic. We noted that in the market, it is not uncommon for an accounting concept or a variation to an accounting method to be explained in a paragraph or in a two-page (or more) spread instead of through an illustration. This is how our approach is very different—accounting concepts are predominantly demonstrated. The active learner can reconstruct the steps independently or attempt the same demo through the electronic system—myBusinessCourse. Alongside the journal entries in the margins, we also include the impact on the accounting equation and T-accounts to aid in student comprehension. Research tells us that active learning, where the student is involved in the learning process, results in considerable advantages in retention. In addition, each demo is accompanied by a short video clip (typically 3 minutes or less) that walks students through the solution to the demo. This approach, along with the supporting resources, are invaluable in any course, but especially in an online course where students are largely working through these complex topics independently.
At the conclusion of each learning objective, a review problem is provided with answers included at the end of the chapter. These review problems are presented to reinforce concepts presented in the section and to ensure student comprehension. By not providing the review solutions on the same page as the review, we are encouraging students to ‘learn by doing.’ The demo, along with the overview material, provides the foundation for students to complete the review problems. Again, students have the opportunity to practice the same problem electronically in myBusinessCourse. We believe that many students will take advantage of the opportunity to work through the problem electronically because they will gain instant feedback as to whether they completed the solution accurately—and frankly, an electronic environment is more in line with how we all function every day. In addition, each review is accompanied by a short video clip (typically 3 minutes or less) that walks students through the solution to the review.
This section expands on related topics of the section through examples and discussions going beyond the section’s learning objective. These topics can enhance classroom discussions or simply allow the curious student to expand to topics beyond the usual coverage. A representative sample follows.
Students appreciate and become more engaged when they can see the real-world relevance of the content they are learning in class. We included current, real-world examples of financial reporting throughout each chapter in Real World boxes.
The challenge in intermediate accounting is applying the concepts to different scenarios. Our end of chapter materials consist of a wide variety of formats, varying levels of complexity, a thorough coverage of learning objectives, and selections with real world data. The materials increase in complexity as you move through the different types of formats: questions, brief exercises, exercises, and problems. The questions in each end of chapter section are numbered sequentially from start to finish to avoid confusion for students. All learning objectives are represented in the end of chapter materials. Each chapter contains approximately 20 questions, 25 brief exercises, 30 exercises, and 15 problems. We prepared a grid plotting each chapter’s content across the best competing texts in the marketplace, arranged by learning objective, to ensure that our coverage meets or exceeds the competition. Importantly, the end of chapter material corresponds with the listed learning objective in that students have the necessary foundational material to complete the corresponding problems.
The last section (Accounting Decisions and Judgments) includes more application-type problems, which are identified as follows:
We provide a separate section summarizing key differences between U.S. GAAP and IFRS, arranged in the same order as the chapter coverage. The presentation of the IFRS section consistently follows our approach of overview, demo, and review. Including the coverage in a separate section provides faculty with the most flexibility in determining how, when, or whether to introduce specific aspects of IFRS.
Chapters are organized into two parts.
Part 1: Chapters 1 through 6 offer a review of introductory financial accounting. We begin with the accounting environment and the underlying conceptual framework. We review the accounting double-entry system, including the preparation and presentation of the four financial statements: Income statement (including comprehensive income), Balance sheet, Statement of equity, and Statement of cash flows. We also show the DuPont framework, which is useful for the analysis and interpretation of accounting reports. The first part of the book concludes with a review of the time value of money.
Part 2: The second part launches with the chapter on revenue recognition. This chapter is crucial to understanding nearly all the remaining chapters, including when revenue (and assets) are recognized, and when expenses (and liabilities) are recognized. Chapters 8 through 22 loosely follow the accounting equation. Specifically, we begin with the chapters covering assets—Chapters 8 through 14, followed by chapters covering liabilities (or both liabilities and assets)—Chapters 15 through 21. We conclude part 2 by revisiting the statement of cash flows (from Chapter 5), which addresses the cash flows related to some special topics introduced in part 2. Finally, Appendix A covers the reporting for accounting changes and error analysis, and Appendix B describes key areas of differences between U.S. GAAP and IFRS.
Selected highlights for each chapter are summarized as follows.
Chapter One—Accounting Environment and the Conceptual Framework
• Concise presentation with direct citations to the Statements of Financial Accounting Concepts (SFACs) allowing students and faculty the opportunity to interpret the guidance directly.
Chapter Two—Accounting Information System
• Visual references to the accounting steps provide clarity throughout the chapter.
Chapter Three—Income Statement and Comprehensive Income
• Includes an introduction to the topics noncontrolling interest and foreign currency translation
• Upfront overview of accounting changes, errors, and estimates with a reference to specific coverage throughout each content area in the book. This eliminates the need for a separate chapter on accounting changes.
Chapter Four—Balance Sheet and Financial Reporting
• Introduction to financial statement disclosures and Form 10-K components provides a base for application of concepts to real world examples.
Chapter Five—Statement of Cash Flows and Financial Analysis
• Stronger emphasis on cash flows in first half of the text, emphasizing its importance in reviewing a full set of financial statements.
• Ratios introduced within the DuPont framework providing a structure to relate ratios to each other. Also distinguishes investment analysis from creditor analysis.
• Includes an introduction to proforma analysis.
• Summary grid of ratios with references to coverage throughout the text.
Chapter Six—Time Value of Money
• Time value of money calculations (in this chapter and throughout text) are illustrated in Excel, consistent with the new tools provided in the CPA exam and tools most relevant in practice.
• Includes clear applications to leases, pensions, bonds, and debt, as introductions to later chapters.
Chapter Seven—Revenue Recognition
• Learning objectives centered around the five steps in the revenue recognition process with demos and reviews concentrated on each separate step. Relevant, real-life examples provided in the demos for each step.
• Includes an overview of long-term construction contracts within the chapter. Appendix on long-term construction contracts is only necessary if faculty prefer to incorporate entries specific to the construction industry.
Chapter Eight—Cash and Receivables
• CECL model incorporated throughout the chapter.
Chapter Nine—Inventory: Measurement
• Includes a demo on periodic vs. perpetual accounting as a review of introductory material that is not always recalled by the typical intermediate student.
Chapter Ten— Inventory: Additional Issues
• Includes a robust, applied discussion of inventory principle changes and errors.
Chapter Eleven—Property, Plant & Equipment: Acquisition & Disposition
• Includes a discussion of construction in process, commonly included in PP&E presentations but missing in competing text books.
Chapter Twelve—Depreciation, Impairments, and Depletion
• Includes examples of commonly used accounting conventions for depreciation.
Chapter Thirteen—Intangible Assets
• Separately presents intangible assets as a standalone topic and not intermingled with property, plant, and equipment to decrease confusion for students and also to reflect its prominence on a balance sheet.
Chapter Fourteen—Investments and Derivatives
• Visual references to the investment categories provide clarity throughout the chapter to aid students in the navigation through multiple classification types.
• Includes a robust appendix on derivatives.
Chapter Fifteen—Short-Term Liabilities and Contingencies
• Incorporates subsequent event discussion with contingency overview.
• Includes examples of the accounting for gift card breakage.
Chapter Sixteen—Long-Term Liabilities
• Short demos followed by immediate practice especially conducive to student retention in complex topics.
• Includes a clear presentation of the accounting for lease incentives, including journal entries.
• Logical presentation of lease accounting with an illustration of variations in demos instead of explanations of exceptions in paragraph form.
Chapter Eighteen—Income Taxes
• Content adjusted for the recently passed U.S. tax reform act.
• Utilizes a balance sheet approach, consistent with the authoritative guidance.
Chapter Nineteen—Pensions and Postretirement Benefits
• Includes journal entries for defined contribution plans
Chapter Twenty—Stockholders’ Equity
• Demonstrations include alternative approaches of treasury stock and direct stock retirement.
Chapter Twenty-One—Share-Based Compensation and Earnings per Share
• Short demos followed by immediate practice especially conducive to student retention in complex topics
Chapter Twenty-Two—Statement of Cash Flows Revisited
• Focuses on the indirect method given the extraordinarily high usage and the overwhelming feedback that the FASB received to not require the use of the direct method.
This interactive tutorial is intended for use in programs that either require or would like to offer a preterm tutorial that creates a baseline of accounting knowledge for students with little to no prior exposure to financial accounting. This product can be used as a refresher of topics introduced in the first financial accounting course. It is designed as an asynchronous, interactive, self-paced experience for students. Available Learning Modules (You Select) follow.
1. Introducing Financial Accounting (approximate completion time 2 hours)
2. Constructing Financial Statements (approximate completion time 4 hours)
3. Adjusting Entries and Completing the Accounting Cycle (approximate completion time 4 hours)
4. Reporting and Analyzing Cash Flows (approximate completion time 3.5 hours)
5. Analyzing and Interpreting Financial Statements (approximate completion time 3.5 hours)
This is a separate, saleable item. Contact your sales representative to receive more information or email email@example.com.
The Guide to Intermediate Accounting Research, by Shelby Collins, is intended to serve as a supplement to the materials used in an intermediate or advanced accounting course. It includes many opportunities to apply Codification guidance to related accounting topics (including, for example, leases, investment accounting, revenue recognition, and consolidation). Students will learn to confidently address and communicate accounting research issues, from start to finish. Students will not only take away the ability to identify the accounting problem (the “researchable question”), but will gain experience locating and applying guidance within the FASB Codification. This is a separate, saleable text (ISBN: 978-1-61853-163-6). Contact your sales representative to receive a desk copy or email firstname.lastname@example.org
Cases in Financial Reporting, 8th edition by Michael Drake (Brigham Young University), Ellen Engel (University of Illinois—Chicago), D. Eric Hirst (University of Texas – Austin), and Mary Lea McAnally (Texas A&M University). This book comprises 27 cases and is a perfect companion book for faculty interested in exposing students to a wide range of real financial statements. The cases are current and cover companies from Japan, Sweden, Austria, the Netherlands, the UK, India, as well as from the U.S. Many of the U.S. companies are major multinationals. Each case deals with a specific financial accounting topic within the context of one (or more) company’s financial statements. Each case contains financial statement information and a set of directed questions pertaining to one or two specific financial accounting issues. This is a separate, saleable casebook (ISBN 978-1-61853-122-3). Contact your sales representative to receive a desk copy or email email@example.com.
Chapter 1 Accounting Environment and the Conceptual Framework
Chapter 2 Accounting Information System
Chapter 3 Income Statement and Comprehensive Income
Chapter 4 Balance Sheet and Financial Reporting
Chapter 5 Statement of Cash Flows and Financial Analysis
Chapter 6 Time Value of Money
Chapter 7 Revenue Recognition
Chapter 8 Cash and Receivables
Chapter 9 Inventory: Measurement
Chapter 10 Inventory: Additional Issues
Chapter 11 Property, Plant, and Equipment: Acquisition and Disposition
Chapter 12 Depreciation, Impairments, and Depletion
Chapter 13 Intangible Assets
Chapter 14 Investments and Derivatives
Chapter 15 Short-Term Liabilities and Contingencies
Chapter 16 Long-Term Liabilities
Chapter 17 Leases
Chapter 18 Income Taxes
Chapter 19 Pensions and Postretirement Benefits
Chapter 20 Stockholders' Equity
Chapter 21 Share-Based Compensation and Earnings Per Share
Chapter 22 Statement of Cash Flows Revisited
Appendix A Accounting Changes and Error Analysis Revisited
Appendix B IFRS
|LO||Topic/Subtopic||Page||Demos||Reviews||Highlights & Tips|
Classify cash, cash equivalents, restricted cash, and compensating balances
Cash::Cash Equivalents::Restricted Cash::Compensating Balances::Balance Sheet Classification
Account for sales and collections on account including the impact of cash discounts
Gross Method::Net Method::Cash Discount::Discount Period
Account for impact of sales returns and allowancesAccount for the impact of sales returns and allowances
Sales Returns::Variable Consideration::Refund Liability::Estimated Returns Inventory
Measure and record accounts receivable at net realizable value using the allowance method
Net Realizable Value::Allowance Method::CECL Model::Aging Schedule::Expected Credit Losses
Measure and record notes receivableNote Receivable::Face Value::Effective-Interest Method::Discount on Note Receivable
Account for the sale of receivables and use as a collateral for borrowing
Secured Borrowing::Collateral::Sale with Recourse::Sale Without Recourse::Recourse Liability
Describe receivable disclosures and ratio analysesAccounts Receivable Turnover::Average Days to Collect Receivables
|LO 8-8||APPENDIX 8A
Apply cash controlsCash Reconciliations::Bank Reconciliation::Accounting Controls
|LO 8-9||APPENDIX 8B
Account for impairment of receivablesBad Debt Expense::Allowance for Doubtful Accounts::Effective-Interest Method::Expected Credit Losses
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