Intermediate Accounting (Volume 2), 1e

by Hanlon, Hodder, Nelson, Roulstone

ISBN: 978-1-61853-307-4 | Copyright 2019

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Welcome to the first edition of Intermediate Accounting, uniquely designed within a system of

interactive resources that are tailored to address 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

Expand/Collapse All
About Our Team (pg. iii)
Preface (pg. iv)
Brief Contents (pg. xiii)
Contents (pg. xiv)
Chapter 13: Intangible Assets and Goodwill (pg. 13-1)
LO13-1 Identify and classify intangible items (pg. 13-3)
Identification of Assets: Intangible Assets and Goodwill (pg. 13-3)
Recognition of Expenses: Internally Generated Intangible Assets and Goodwill (pg. 13-5)
Demo 13-1 Classification of Intangible Items (pg. 13-6)
Review 13-1 Classification of Intangible Items (pg. 13-7)
LO13-2 Determine the initial and subsequent measurements of intangible assets (pg. 13-8)
Initial Measurement of Intangible Assets (pg. 13-8)
Subsequent Measurement of Finite Life Intangible Assets (pg. 13-8)
Demo 13-2 Classification of Intangible Items (pg. 13-9)
Review 13-2 Subsequent Measurement of Intangible Assets (pg. 13-10)
LO13-3 Record goodwill resulting from an acquisition (pg. 13-11)
Demo 13-3 Subsequent Measurement of Intangible Assets (pg. 13-12)
Review 13-3 Recording of Goodwill (pg. 13-14)
LO13-4 Account for impairment and derecognition of intangibles (pg. 13-15)
Impairment of Finite Life Intangible Assets (pg. 13-15)
Demo 13-4A Impairment of Finite Life Intangible Asset—Patent (pg. 13-16)
Impairment of Indefinite Life Intangible Assets (pg. 13-16)
Demo 13-4B Impairment of Finite Life Intangible Asset—Patent (pg. 13-17)
Impairment of Goodwill (pg. 13-18)
Demo 13-4C Impairment of Goodwill (pg. 13-19)
Derecognition of Intangible Assets (pg. 13-19)
Demo 13-4D Derecognition of Intangible Asset—Patent (pg. 13-20)
Management Judgment (pg. 13-20)
Review 13-4 Impairment and Derecognition of Intangibles (pg. 13-20)
LO13-5 Account for changes in estimates with intangible assets (pg. 13-21)
Demo 13-5 Change in Estimate—Intangible Asset (pg. 13-21)
Review 13-5 Change in Estimate-Patent (pg. 13-21)
LO13-6 Account for research and development costs (pg. 13-22)
Identifying Research and Development Expense (pg. 13-23)
Demo 13-6A Identification of Research and Development Expense (pg. 13-23)
Accounting for Software Research and Development Costs (pg. 13-24)
Demo 13-6B Accounting for Software Research and Development Costs (pg. 13-25)
Review 13-6 Research and Development Costs (pg. 13-26)
Questions (pg. 13-27)
Brief Exercises (pg. 13-28)
Exercises (pg. 13-30)
Problems (pg. 13-35)
Accounting Decisions and Judgments (pg. 13-39)
Answers to Review Exercises (pg. 13-42)
Chapter 14: Investments in Debt and Equity Securities (pg. 14-1)
Expanded Chapter Preview (pg. 14-3)
LO14-1 Account for debt securities measured at amortized cost (pg. 14-4)
Held-to-Maturity Securities (pg. 14-4)
Measurement of HTM Securities (pg. 14-5)
Accounting for HTM Investment Purchased at Face Value (pg. 14-6)
Demo 14-1A HTM Investment Purchased at Par (pg. 14-6)
Accounting for HTM Investment Purchased at a Discount-Effective Interest Method (pg. 14-6)
Demo 14-1B HTM Investment Purchased at a Discount (Effective Interest) (pg. 14-7)
Accounting for HTM Investment Purchased at a Premium-Effective Interest Method (pg. 14-8)
Demo 14-1C HTM Investment Purchased at a Premium (Effective Interest) (pg. 14-8)
Accounting for HTM Investment-Straight-Line Interest Method (pg. 14-10)
Demo 14-1D HTM Investment Purchased at a Discount (Straight-Line Interest Method) (pg. 14-10)
Demo 14-1E HTM Investment Purchased at a Premium (Straight-line Amortization) (pg. 14-11)
Review 14-1 Accounting for HTM Debt Investments at Amortized Cost (pg. 14-12)
LO14-2 Account for debt securities measured at FV-NI (pg. 14-12)
Trading Securities (pg. 14-12)
Demo 14-2A Trading Security Investment (pg. 14-13)
Demo 14-2B Fair Value Option Accounting—Debt Security (pg. 14-15)
Review 14-2 Accounting for TS Debt Investment at FV-NI (pg. 14-15)
LO14-3 Account for debt securities measured at FV-OCI (pg. 14-16)
Available-for-Sale Securities (pg. 14-16)
Demo 14-3A Available-for-Sale Securities—Bonds (pg. 14-17)
Review 14-3 Accounting for AFS Debt Investment at FV-OCI (pg. 14-22)
Review of Accounting for Debt Securities (pg. 14-22)
LO14-4 Account for equity securities measured at FV-NI (pg. 14-23)
Demo 14-4 Equity Investments Measured at FV-NI (pg. 14-24)
Review 14-4 Accounting for Investments Measured at FV-NI (pg. 14-27)
LO14-5 Account for equity securities following the equity method (pg. 14-27)
Demo 14-5 Equity Method Accounting (pg. 14-29)
Review of Accounting for Equity Securities (pg. 14-31)
LO14-6 Adjust debt and equity securities for impairment (pg. 14-31)
Held-to-Maturity Debt Investment (pg. 14-32)
Available-for-Sale Debt Investment (pg. 14-32)
Equity Method Investment (pg. 14-33)
Demo 14-6 Loss on Impairment of Investments (pg. 14-33)
Review 14-6 Accounting for Impairment Loss on Investments (pg. 14-35)
APPENDIX 14A LO 14-7 Explain the accounting for transfers of investments (pg. 14-35)
Demo 14-7 Accounting for Transfer of Investment (pg. 14-36)
Review 14-7 Accounting for Transfer of Investment (pg. 14-36)
Review 14-7 Accounting for Transfer of Investment (pg. 14-36)
APPENDIX 14B LO 14-8 Describe accounting for special-purpose funds and investments in life insuranc (pg. 14-36)
Investment in Life Insurance Policies (pg. 14-37)
Demo 14-8 Accounting for Other Investments (pg. 14-37)
Review 14-8 Accounting for Other Investments (pg. 14-38)
APPENDIX 14C LO 14-9 Describe and account for derivatives (pg. 14-38)
Speculative Derivative Instrument-Call Option on Stock (pg. 14-39)
Demo 14-9A Call Option as a Speculative Investment— Underlying is Fair Value of Stock (pg. 14-40)
Hedging Derivative Instrument-Put Option as a Fair Value Hedge (pg. 14-41)
Demo 14-9B Put Option as a Fair Value Hedge—Underlying is an Asset (pg. 14-42)
Hedging Derivative Instrument-Interest Rate Swap as a Fair Value Hedge (pg. 14-43)
Demo 14-9C Interest Rate Swap as a Fair Value Hedge—Underlying is a Liability (pg. 14-43)
Hedging Derivative Instrument-Cash Flow Hedge (pg. 14-44)
Demo 14-9D Futures Contract as a Cash Flow Hedge—Underlying is the Market Price of a Purchase (pg. 14-45)
Summary of Derivative Instruments (pg. 14-47)
Review 14-9 Accounting for Derivatives (pg. 14-48)
APPENDIX 14D LO 14-10 Adjust investments to fair value more frequently than at year-end (pg. 14-49)
Demo 14-10 Equity Investments Measured at FV-NI (pg. 14-49)
Review 14-10 Equity Investments Measured at FV-NI (pg. 14-51)
Questions (pg. 14-51)
Brief Exercises (pg. 14-52)
Exercises (pg. 14-55)
Problems (pg. 14-62)
Accounting Decisions and Judgments (pg. 14-70)
Appendices-Brief Exercises (pg. 14-76)
Appendices-Exercises (pg. 14-77)
Appendices-Problems (pg. 14-79)
Answers to Review Exercises (pg. 14-80)
Chapter 15: Current Liabilities and Contingencies (pg. 15-1)
LO15-1 Record accounts payable and sales taxes payable (pg. 15-3)
Accounts Payable (pg. 15-3)
Demo 15-1A Accounting for Accounts Payable (pg. 15-4)
Sales Taxes Payable (pg. 15-5)
Demo 15-1B Accounting for Sales Taxes Payable (pg. 15-5)
Review 15-1 Recording Accounts Payable and Sales Taxes Payable (pg. 15-6)
LO15-2 Record customer deposits and advances (pg. 15-6)
Customer Returnable Deposits (pg. 15-7)
Demo 15-2A Accounting for Returnable Deposits (pg. 15-7)
Customer Advance Payments (pg. 15-8)
Demo 15-2B Accounting for Deferred Revenue (pg. 15-8)
Demo 15-2C Accounting for Gift Cards (pg. 15-9)
Review 15-2 Recording Customer Deposits and Advances (pg. 15-11)
LO15-3 Measure and record employee payroll withholdings, employer payroll taxes, employee compensat (pg. 15-11)
Withholdings from Wages of Employees (pg. 15-11)
Demo 15-3A Recording Employee Payroll Withholdings (pg. 15-12)
Accrual for Payroll Taxes (pg. 15-12)
Demo 15-3A Recording Employer Payroll Taxes (pg. 15-12)
Accrual for Compensated Absences (pg. 15-13)
Demo 15-3C Recording Compensated Absences (pg. 15-13)
Bonus Accrual (pg. 15-14)
Demo 15-3D Recording Bonus Accruals (pg. 15-14)
Review 15-3 Recording Payroll Withholding and Taxes, Compensated Absences, and Bonuses (pg. 15-15)
LO15-4 Account for short-term debt and classify debt on the balance sheet (pg. 15-15)
Short-Term Notes Payable-Interest-Bearing (pg. 15-17)
Demo 15-4A Short-Term Note Payable-Interest-Bearing (pg. 15-17)
Short-Term Notes Payable-Issued at a Discount (pg. 15-18)
Demo 15-4B Short-Term Note Payable-Issued at a Discount (pg. 15-18)
Balance Sheet Classification of Debt (pg. 15-19)
Demo 15-4C Balance Sheet Classification of Debt (pg. 15-20)
Review 15-4 Accounting for and Reporting Debt (pg. 15-21)
LO15-5 Describe accounting for subsequent events and contingencies including litigation, warranties, (pg. 15-23)
Loss Contingencies (pg. 15-23)
Demo 15-5A Accounting for Litigation Loss Contingencies (pg. 15-25)
Financial Reporting of Subsequent Events (pg. 15-26)
Demo 15-5B Accounting for Subsequent Events (pg. 15-28)
A Deeper Look at Certain Loss Contingencies (pg. 15-29)
Demo 15-5C Accounting for Warranty Loss Contingencies (pg. 15-31)
Demo 15-5D Accounting for a Gain Contingency (pg. 15-33)
Review 15-5 Reporting of Contingencies and Subsequent Events (pg. 15-33)
LO15-6 Explain liability and contingency disclosures and analyses using liquidity ratios (pg. 15-34)
Disclosure of Current Liabilities and Contingencies (pg. 15-35)
Liquidity Ratios (pg. 15-37)
Demo 15-6 Liquidity Ratios (pg. 15-38)
Review 15-6 Calculating Liquidity Ratios (pg. 15-39)
Questions (pg. 15-39)
Brief Exercises (pg. 15-40)
Exercises (pg. 15-43)
Problems (pg. 15-50)
Accounting Decisions and Judgments (pg. 15-54)
Answers to Review Exercises (pg. 15-58)
Chapter 16 Long-Term Liabilities (pg. 16-1)
LO 16-1 Identify types and features of bonds (pg. 16-3)
Bond Types (pg. 16-4)
Demo 16-1A Bond Types (pg. 16-4)
Bond Features (pg. 16-4)
Demo 16-1B Bond Features (pg. 16-5)
Review 16-1 Bond Types and Features (pg. 16-6)
LO 16-2 Measure and record bonds at issuance (pg. 16-6)
Bond Selling Price at Issuance (pg. 16-6)
Review 16-2 Pricing Issuance of Bonds (pg. 16-10)
LO 16-3 Account for bonds issued at face value (pg. 16-10)
Demo 16-3 Account for Bonds Issued at Face Value (pg. 16-10)
Review 16-3 Account for Bonds Issued at Face value (pg. 16-11)
LO 16-4 Account for bonds issued at a discount (pg. 16-11)
Demo 16-4A Account for Bonds Issued at a Discount [Effective-Interest Method] (pg. 16-12)
Demo 16-4B Account for Bonds Issued at a Discount [Straight-line Amortization] (pg. 16-14)
Demo 16-4C Debt Issuance Costs (pg. 16-16)
Review 16-4 Account for Bonds Issued at a Discount (pg. 16-17)
LO 16-5 Account for bonds issued at a premium (pg. 16-17)
Demo 16-5A Account for Bonds Issued at a Premium [Effective-Interest Method] (pg. 16-18)
Demo 16-5B Account for Bonds Issued at a Premium [Straight-line Amortization] (pg. 16-20)
Review 16-5 Account for Bonds Issued at a Premium (pg. 16-21)
LO 16-6 Measure and record notes at issuance and after issuance (pg. 16-21)
Notes Payable Issued for Cash (pg. 16-22)
Demo 16-6A Note Payable Issued for Cash (pg. 16-22)
Notes Payable Issued for Non-Cash Consideration [Property, Goods, or Services] (pg. 16-25)
Demo 16-6B Note Payable Issued for Non-Cash Consideration (pg. 16-25)
Review 16-7 Accounting for Extinguishment of Debt (pg. 16-31)
LO 16-9 Account for bonds with warrants (pg. 16-34)
LO 16-10 Apply the fair value option for liabilities (pg. 16-37)
Review 16-10 Accounting for Debt Using the Fair Value Option (pg. 16-39)
LO 16-11 Describe financing disclosures and analyses using leverage ratios (pg. 16-39)
Debt Disclosures with Financial Statements (pg. 16-39)
Demo 16-11A Disclosure of Five-Year Debt Maturitie (pg. 16-40)
Financial Leverage Ratios (pg. 16-41)
Troubled Debt Restructure-Debtor (pg. 16-43)
Troubled Debt Restructure-Creditor (pg. 16-47)
Demo 16-12B Debt Restructuring-CREDITOR Perspective (pg. 16-47)
Review 16-12 Accounting for Debt Settlement and Debt Restructuring (pg. 16-48)
Questions (pg. 16-49)
Exercises (pg. 16-52)
Problems (pg. 16-59)
Appendices-Questions (pg. 16-70)
Appendices-Brief Exercises (pg. 16-70)
Appendices-Problems (pg. 16-71)
Chapter 17 Accounting for Leases (pg. 17-1)
Expanded Chapter Preview (pg. 17-3)
LO17-1 Determine lease types for lessees and lessors and classify leases using lease criteria (pg. 17-4)
Definition of a Lease (pg. 17-4)
Lease Classification Criteria (pg. 17-8)
Lease Classification (pg. 17-10)
Demo 17-1 Analysis of Lease Classification Criteria (pg. 17-11)
Review 17-1 Determine Lease Classification (pg. 17-12)
LO 17-2 Account for a finance lease for a lessee (pg. 17-12)
LO17-3 Account for a sales-type lease for a lessor (pg. 17-25)
Lease Receivable (pg. 17-25)
Calculation of Lease Payment (pg. 17-26)
Initial Direct Lease Costs (pg. 17-26)
Demo 17-3A Lessor—Sales-Type Lease with No Residual Value (pg. 17-26)
Demo 17-3B Lessor—Sales-Type Lease with a Guaranteed Residual Value (pg. 17-29)
Review 17-3 Account for Sales-Type Lease by Lessor (pg. 17-32)
LO17-4 Account for an operating lease for a lessee (pg. 17-33)
Straight-Line Lease Expense (pg. 17-33)
Demo 17-4A Lessee—Operating Lease (pg. 17-34)
Demo 17-4B Lessee—Operating Lease with Prepayment, Initial Cost, Incentive (pg. 17-37)
Review 17-4 Accounting for Operating Lease by Lessee (pg. 17-41)
LO17-5 Account for an operating lease for a lessor (pg. 17-42)
Demo 17-5 Lessor—Operating Lease (pg. 17-42)
Review 17-5 Accounting for Operating Lease by Lessor (pg. 17-44)
LO17-6 Explain lease modifications and lease remeasurements (pg. 17-44)
Lease Modifications (pg. 17-44)
Additional Cases of Lease Classification Reassessment and Lease Remeasurement (pg. 17-44)
Demo 17-6 Lease Modifications (pg. 17-45)
Review 17-6 Lease Modifications (pg. 17-47)
LO17-7 Explain the accounting policy election for short-term leases and other lease disclosures (pg. 17-47)
Short-Term Leases (pg. 17-47)
Demo 17-7 Short-Term Leases (pg. 17-48)
Review 17-7 Accounting for Operating Lease by Lessor (pg. 17-50)
APPENDIX 17A LO 17-8 Account for direct financing leases by the lessor (pg. 17-50)
Demo 17-8 Lessor—Direct Financing Lease (pg. 17-51)
Review 17-8 Accounting for Direct Financing Leases (pg. 17-53)
APPENDIX 17B LO 17-9 Describe the difference in accounting for a sale-leaseback versus a failed sale (pg. 17-54)
Demo 17-9 Sale-leaseback and Failed Sale (pg. 17-55)
Review 17-9 Accounting for Sale-Leaseback (pg. 17-57)
Questions (pg. 17-57)
Brief Exercises (pg. 17-58)
Exercises (pg. 17-61)
Problems (pg. 17-71)
Accounting Decisions and Judgments (pg. 17-76)
Appendices-Brief Exercises (pg. 17-80)
Appendices-Exercises (pg. 17-80)
Answers to Review Exercises (pg. 17-81)
Chapter 18: Income Taxes (pg. 18-1)
Expanded Chapter Preview (pg. 18-3)
LO18-1 Describe taxable temporary differences that lead to deferred tax liabilities and related inco (pg. 18-4)
Demo 18-1 Taxable Temporary Difference Leading to Deferred Tax Liability (pg. 18-6)
Review 18-1 Taxable Temporary Difference Leading to Deferred Tax Liability (pg. 18-8)
LO18-2 Describe deductible temporary differences that lead to deferred tax assets and related income (pg. 18-9)
Demo 18-2 Deductible Temporary Differences Leading to a Deferred Tax Asset (pg. 18-10)
Reveiw 18-2 Deductible Temporary Difference Leading to Deferred Tax Asset (pg. 18-12)
LO18-3 Explain how to record and report a valuation allowance for deferred tax assets (pg. 18-13)
Management Judgment (pg. 18-13)
Demo 18-3 Account for Deferred Tax Asset Valuation Allowance (pg. 18-14)
Review 18-3 Tax Asset Valuation Allowance (pg. 18-15)
LO18-4 Describe permanent differences and other items that impact the reported effective tax rate (pg. 18-16)
Other Items that Impact Effective Tax Rate (pg. 18-17)
Demo 18-4A Permanent Difference (pg. 18-17)
Demo 19-4B Multiple Temporary and Permanent Differences (pg. 18-18)
Review 18-4 Multiple Temporary and Permanent Differences (pg. 18-21)
LO18-5 Explain how a change in tax rates impacts deferred taxes (pg. 18-21)
Demo 18-5 Change in Enacted Tax Rate (pg. 18-22)
Review 18-5 Change in Enacted Tax Rate (pg. 18-24)
LO18-6 Describe accounting for net operating loss carryforwards (pg. 18-25)
Demo 18-6 Net Operating Loss Carryforward (pg. 18-25)
Review 18-6 Net Operating Loss Carryforward (pg. 18-27)
LO18-7 Explain and demonstrate accounting for uncertainty in income tax decisions (pg. 18-27)
Step One: Recognition (pg. 18-28)
Step Two: Measurement (pg. 18-28)
Demo 18-7 Uncertain Tax Positions (pg. 18-28)
Review 18-7 Uncertain Tax Benefit (pg. 18-31)
LO18-8 Describe financial statement disclosure for deferred taxes and income tax expense (pg. 18-31)
Financial Statement Presentation (pg. 18-31)
Disclosure Requirements for Income Tax (pg. 18-32)
Demo 18-8 Balance Sheet Classification of Deferred Tax Assets and Liabilities (pg. 18-33)
Review 18-8 Financial Statement Presentation of Deferred Taxes (pg. 18-33)
Appendix 18A LO18-9 Apply intraperiod tax allocation (pg. 18-34)
Demo 18-9 Intraperiod Tax Allocation (pg. 18-34)
Review 18-9 Intraperiod Tax Allocation (pg. 18-35)
Appendix 18B LO18-10 Apply tax effects to changes in accounting principle and error corrections (pg. 18-35)
Change in Accounting Principle (pg. 18-35)
Demo 180-10A Change in Accounting Principle (pg. 18-36)
Error Correction (pg. 18-36)
Demo 18-10B Error Correction (pg. 18-36)
Review 18-10 Change in Accounting Principle and Error Correction (pg. 18-37)
Questions (pg. 18-37)
Brief Exercises (pg. 18-38)
Exercises (pg. 18-41)
Problems (pg. 18-50)
Accounting Decisions and Judgments (pg. 18-53)
Appendices-Brief Exercises (pg. 18-58)
Appendices-Exercises (pg. 18-58)
Appendices-Problems (pg. 18-59)
Answers to Review Exercises (pg. 18-60)
Chapter 19: Pensions and Postretirement Benefits (pg. 19-1)
Expanded Chapter Preview (pg. 19-3)
LO19-1 Describe defined contribution plans and defined benefit plans and the measurement of related (pg. 19-4)
Defined Contribution Plan (pg. 19-4)
Demo 19-1A Accounting for Defined Contribution Plan (pg. 19-5)
Defined Benefit Plan (pg. 19-5)
Demo 19-1B Estimating Pension Obligations (pg. 19-7)
Review 19-1 Defined Contribution and Defined Benefit Pension Plans (pg. 19-8)
LO19-2 Determine the five components of change in projected benefit obligation (pg. 19-9)
Component Changes in the Projected Benefit Obligation (pg. 19-9)
Demo 19-2 Recognizing Changes in the Projected Benefit Obligation (pg. 19-10)
Review 19-2 Determine Changes in the Components of PBO (pg. 19-11)
LO19-3 Reconcile pension plan assets and determine funded status (pg. 19-11)
Reconciliation of Plan Assets (pg. 19-11)
Demo 19-3A Reconcile Pension Plan Assets (pg. 19-12)
Financial Statement Reporting of Funded Status (pg. 19-12)
Demo 19-3B Determination of Funded Status (pg. 19-13)
Review 19-3 Reconciliation of Plan Assets and Determination of Plan’s Funded Status (pg. 19-14)
LO19-4 Determine the five components of pension expense (pg. 19-15)
Service Cost (pg. 19-15)
Interest Cost (pg. 19-15)
Expected Return on Plan Assets (pg. 19-15)
Amortization of Prior Service Cost (pg. 19-16)
Amortization of Pension Gain/Loss (pg. 19-16)
Demo 19-4 Components of Pension Expense (pg. 19-17)
Review 19-4 Components of Pension Expense (pg. 19-19)
LO19-5 Record prior service cost amendment, pension expense, gains and losses, funding, and benefits (pg. 19-19)
Recording Prior Service Cost Amendment (pg. 19-19)
Recording Pension Expense (pg. 19-19)
Recording Deferral of Pension Gains and Losses (pg. 19-20)
Recording Employer Contributions (pg. 19-20)
Recording Benefits Paid (pg. 19-20)
Demo 19-5 Recording the Impact of Defined Benefit Plan (pg. 19-20)
Review 19-5 Recording the Impact of a Defined Benefit Plan (pg. 19-22)
LO19-6 Describe the reporting of pensions in financial statements (pg. 19-23)
Income Statement (pg. 19-23)
Comprehensive Income Statement and Statement of Stockholders’ Equity (pg. 19-23)
Balance Sheet (pg. 19-23)
Demo 19-6 Pension Plan Reporting (pg. 19-24)
Disclosure Requirements (pg. 19-25)
Judgment in Pension Assumptions (pg. 19-25)
Review 19-6 Reporting a Defined Benefit Pension Plan (pg. 19-26)
Lo19-7 Use a pension worksheet to record pension journal entries (pg. 19-26)
Demo 19-7 Preparation of a Pension Worksheet (pg. 19-27)
Review 19-7 Record Pension Entries Using a Pension Worksheet (pg. 19-28)
Appendix 19A LO19-8 Explain postretirement benefit plans and differences from pensions plans (pg. 19-28)
Disclosure (pg. 19-29)
Demo 19-8 Determining Obligations for Postretirement Benefit Plan (pg. 19-30)
Review 19-8 Determining Obligations for Postretirement Benefit Plan (pg. 19-31)
Appendix 19-9B LO19-9 Record postretirement benefit expense, gains and losses, funding, and benefit (pg. 19-31)
Demo 19-9Recording Entries for Postretirement Benefit Plan (pg. 19-31)
Review 19-9 Recording Entries for Postretirement Benefit Plan (pg. 19-34)
Appendix 19C LO19-10 Allocate prior service cost using the service method (pg. 19-34)
Demo 19-10 Allocation of Prior Service Cost (pg. 19-35)
Review 19-10 Allocation of Prior Service Costs (pg. 19-35)
Questions (pg. 19-36)
Brief Exercises (pg. 19-36)
Exercises (pg. 19-39)
Problems (pg. 19-46)
Accounting Decisions and Judgments (pg. 19-51)
Appendices-Brief Exercises (pg. 19-58)
Appendices-Exercises (pg. 19-59)
Appendices-Problems (pg. 19-60)
Answers to Review Exercises (pg. 19-61)
Chapter 20: Stockholders’ Equity (pg. 20-1)
Chapter 21: Share-Based Compensation and Earnings per Share (pg. 21-1)
LO21-1 Account for restricted stock plans (pg. 21-3)
Restricted Stock SHARE Awards (pg. 21-3)
Restricted Stock UNIT Awards (pg. 21-4)
Demo 21-1A Accounting for Restricted Stock Shares (pg. 21-4)
Demo 21-1B Accounting for Restricted Stock Units (pg. 21-5)
Review 21-1 Accounting for Restricted Stock Plans (pg. 21-7)
LO21-2 Account for stock options (pg. 21-8)
Demo 21-2 Accounting for Restricted Stock Units (pg. 21-10)
Review 21-2 Accounting for Stock Options (pg. 21-13)
LO21-3 Account for employee share purchase plans (pg. 21-13)
Demo 21-3 Accounting for Employee Share Purchase Plans (pg. 21-14)
Review 21-3 Accounting for Employee Share Purchase Plans (pg. 21-15)
LO21-4 Compute earnings per share (EPS) with a simple capital structure (pg. 21-15)
Demo 21-4 Earning per Share Calculation—Simple Capital Structure (pg. 21-15)
Review 21-4 Calculation of Basic EPS (pg. 21-16)
LO21-5 Compute EPS given share issuances, buybacks, dividends, -and splits (pg. 21-16)
Share Issuances and Buybacks (pg. 21-16)
Stock Dividends and Stock Splits (pg. 21-16)
Preferred Stock Dividends (pg. 21-17)
Demo 21-5 EPS Calculations—Simple Capital Structure (pg. 21-17)
Review 21-5 Calculation of Basic EPS (pg. 21-20)
LO 21-6 Compute EPS using if-converted method for convertible securities (pg. 21-20)
Convertible Bonds and Convertible Preferred Stock (pg. 21-21)
Demo 21-6A EPS Calculations—Convertible Bonds (pg. 21-22)
Demo 21-6B EPS Calculations—Convertible Preferred Stock (pg. 21-24)
Review 21-6 Calculation of EPS-Convertible Bonds and Convertible Preferred Stock (pg. 21-25)
LO21-6 Compute EPS using treasury stock method for options, warrants, and restricted stock (pg. 21-25)
Stock Options and Warrants (pg. 21-25)
Demo 21-7A EPS Calculations—Convertible Preferred Stock (pg. 21-26)
Unvested Restricted Stock (pg. 21-27)
Demo 21-7B EPS Calculations—Restricted Stock (pg. 21-28)
Review 21-7 EPS Calculations-Options and Restricted Stock (pg. 21-29)
LO21-8 Compute EPS using contingent methods (pg. 21-30)
Demo 21-8 Compute EPS Given Contingently Issuable Shares (pg. 21-30)
Review 21-8 Calculation of EPS Given Contingently Issuable Shares (pg. 21-31)
LO21-9 Compute EPS given multiple securities and describe EPS financial statement presentation (pg. 21-31)
Demo 21-9 Compute EPS Given Contingently Issuable Shares (pg. 21-31)
Presentation and Disclosure of EPS (pg. 21-33)
Review 21-9 Calculation of EPS—Multiple Securities (pg. 21-34)
APPENDIX 21A LO 21-10 Describe accounting for stock appreciation rights (pg. 21-35)
Recording SARs as Equity (pg. 21-35)
Recording SARs as a Liability (pg. 21-35)
Demo 21-10 Stock Appreciation Rights (pg. 21-36)
Review 21-10 Accounting for Stock Appreciation Rights (pg. 21-37)
Questions (pg. 21-37)
Brief Exercises (pg. 21-38)
Exercises (pg. 21-41)
Problems (pg. 21-48)
Accounting Decisions and Judgments (pg. 21-52)
Appendices-Brief Exercises (pg. 21-57)
Appendices-Exercises (pg. 21-57)
Appendices-Problems (pg. 21-58)
Answers to Review Exercises (pg. 21-58)
Chapter 22: Statement of Cash Flows Revisited (pg. 22-1)
LO22-1 Identify operating, investing, and financing activities, and the statement of cash flows for (pg. 22-3)
Cash Flows from Operating Activities (pg. 22-3)
Cash Flows from Investing Activities (pg. 22-4)
Cash Flows from Financing Activities (pg. 22-5)
Format of Statement of Cash Flows (pg. 22-5)
Demo 22-1 Identify Operating, Investing, and Financing Activities (pg. 22-6)
Review 22-1 Identify Operating, Investing, and Financing Activities (pg. 22-6)
LO22-2 Prepare the operating activities cash flow section of the statement of cash flows using the i (pg. 22-7)
Operating Activities Cash Flow Section-Indirect Method (pg. 22-7)
Demo 22-2 Net Cash Flows from Operating Activities (pg. 22-9)
Other Items Affecting Cash Flows from Operating Activities (pg. 22-12)
Review 22-2 Prepare the Operating Activities Section (pg. 22-15)
LO22-3 Prepare the investing activities section of the statement of cash flows (pg. 22-15)
Demo 22-3 Net Cash Flows from Investing Activities (pg. 22-16)
Other Item Affecting Cash Flows from Investing Activities (pg. 22-17)
LO22-4 Prepare the financing activities section of the statement of cash flows (pg. 22-17)
Demo 22-4 Net Cash Flows from Financing Activities (pg. 22-18)
Other Financing Activities (pg. 22-20)
Review 22-4 Prepare the Financing Activities Section (pg. 22-22)
LO22-5 Describe required disclosures including that for noncash transactions (pg. 22-22)
Cash Flow Reporting (pg. 22-22)
Noncash Transactions (pg. 22-23)
Demo 22-5 Disclosure of Noncash Transactions (pg. 22-24)
Review 22-5 Disclosure of Noncash Transactions (pg. 22-25)
LO22-6 Utilize a worksheet to prepare the statement of cash flows (pg. 22-26)
Demo 22-6 Cash Flow Worksheet (pg. 22-26)
Review 22-6 Preparing Cash Flow Worksheet Entries (pg. 22-29)
LO22-7 Prepare the operating cash flow section of the statement of cash flows using the direct metho (pg. 22-29)
Demo 22-7 Cash Flows from Operating Activities under Direct Method (pg. 22-30)
Review 22-7 Cash Flows from Operating Activities Using the Direct Method (pg. 22-35)
Appendix 22A LO22-8 Prepare a statement of cash flows using the cash T-Account approach (pg. 22-36)
Demo 22-8 Cash T-Account Approach (pg. 22-36)
Review 22-8 Cash T-Account Approach (pg. 22-38)
Questions (pg. 22-38)
Brief Exercises (pg. 22-39)
Exercises (pg. 22-42)
Problems (pg. 22-54)
Accounting Decisions and Judgments (pg. 22-64)
Appendix-Exercise (pg. 22-69)
Appendix-Problem (pg. 22-69)
Answers to Review Exercises (pg. 22-69)
Appendix A: Accounting Changes and Error Analysis Revisited (pg. A-1)
Expanded Appendix Overview (pg. A-3)
LOA-1 Demonstrate the accounting for a change in accounting estimate and a change in accounting esti (pg. A-4)
Disclosure (pg. A-5)
LOA-2 Demonstrate the accounting for a change in accounting principle (pg. A-5)
Voluntary Change in Accounting Principle-Retrospective Approach (pg. A-6)
Voluntary Change in Accounting Principle-Prospective Approach (pg. A-6)
Required Change in Accounting Principle Based on a Codification Update (pg. A-7)
Direct and Indirect Effects (pg. A-8)
Disclosure Requirements (pg. A-8)
Management Judgment (pg. A-9)
LOA-3 Demonstrate the accounting for an error correction (pg. A-9)
Disclosure (pg. A-10)
LOA-4 Describe the accounting for a change in reporting entity (pg. A-12)
Disclosure (pg. A-12)
Demo A-4 Identification of a Change in Reporting Entity (pg. A-13)
Questions (pg. A-13)
Brief Exercises (pg. A-15)
Exercises (pg. A-15)
Problems (pg. A-17)
Analyzing Financial Statements (pg. A-19)
Michelle L. Hanlon

Michelle L. Hanlon

Michelle L. Hanlon is the Howard W. Johnson Professor at the MIT Sloan School of Management. She earned her doctorate at the University of Washington.

Prior to joining MIT, she was a faculty member at the University of Michigan. Professor Hanlon has taught financial accounting to undergraduates, MBA students, executive MBA students, and Masters of Finance students. Professor Hanlon also teaches Taxes and Business Strategy to MBA students. She is the winner of the 2013 Jamieson Prize for Excellence in Teaching at MIT Sloan.

Professor Hanlon’s research focuses primarily on the intersection of taxation and financial accounting. Her recent work examines the capital market effects of the accounting for income tax, the reputational effects of corporate tax avoidance, and the economic consequences of U.S. international tax policies for multinational corporations. She has published research studies in the Journal of Accounting and Economics, the Journal of Accounting Research, The Accounting Review, the Review of Accounting Studies, the Journal of Finance, the Journal of Financial Economics, the Journal of Public Economics, and others. She has won several awards for her research and has presented her work at numerous universities and conferences. Professor Hanlon has served on several editorial boards and currently serves as an editor at the Journal of Accounting and Economics. 

Professor Hanlon has testified in front of the U.S. Senate Committee on Finance and the U.S. House of Representatives Committee on Ways and Means about the interaction of financial accounting and tax policy. She served as a U.S. delegate to the American-Swiss Young Leaders Conference in 2010 and worked as an Academic Fellow at the U.S. House Ways and Means Committee in 2015.


Leslie Hodder

Leslie Hodder

Professor and the Dean’s Faculty Fellow at Indiana University’s Kelley School of Business

Professor Hodder received her B.B.A and M.B.A./M.Acc from the University of New Mexico and her Ph.D. from the University of Texas at Austin. Prior to obtaining her Ph.D., Professor Hodder was Chief Financial Officer of a publicly traded commercial bank holding company in southern California. Professor Hodder was on faculty at Stanford University before joining the Indiana University faculty in 2003. Her research has appeared in top accounting journals, including The Accounting Review, Review of Accounting Studies, Contemporary Accounting Research, and Accounting Organizations and Society. She is the past winner of the American Accounting Association’s Wildman Award, is a past and present Editor at The Accounting Review, and is currently on the Executive Board of the American Accounting Association. Professor Hodder teaches financial-accounting-related topics in the undergraduate, master, and doctoral programs. Over her teaching career, she has developed or co-developed six courses in financial accounting, including Intermediate Financial Accounting I and II, Applied Audit and Accounting Research, and Detecting Earnings Management with a focus on data analytics. Professor Hodder currently teaches intermediate accounting to undergraduates.


Karen K. Nelson

Karen K. Nelson

M.J. Neeley Professor of Accounting at TCU. Former Harmon Whittington Professor of Accounting and past Accounting Area Coordinator at the Jones Graduate School of Business at Rice University.

Karen previously served on the faculty at Rice University, the Stanford University Graduate School of Business, and as a visiting professor at the University of Michigan. She earned her Ph.D. at the University of Michigan and a bachelor’s degree (summa cum laude) from the University of Colorado. She also holds a CPA license from the state of Colorado. Professor Nelson’s research focuses on financial reporting and disclosure issues, including the role of regulators, auditors, and private securities litigation in monitoring financial reporting quality. She has held research seminars at over 50 leading business schools in the U.S. and abroad, and published in a variety of leading academic journals including The Accounting Review, Journal of Accounting and Economics, Journal of Accounting, and Review of Accounting Studies. Her research has been featured in the financial press in publications such as The Wall Street Journal, Business Week, and Forbes. She is an active member of the American Accounting Association and serves on the Editorial Board of The Accounting Review. She has taught financial accounting at all levels, and her students have honored her with numerous awards for teaching excellence. She currently teaches intermediate accounting to undergraduates and financial accounting to MBAs. She is a member of the Standing Advisory Group of the Public Company Accounting Oversight Board.

Darren Roulstone

Darren Roulstone

Distinguished Professor of Accounting at the Ohio State University’s Fisher College of Business.

Professor Roulstone earned his doctorate at the University of Michigan’s Ross School of Business and BS and MAcc degrees from Brigham Young University’s Marriott School of Management. Professor Roulstone currently directs the Ph.D. program in Accounting and Management Information Systems at Fisher. He teaches a seminar on capital markets research and the core course in financial reporting in Fisher’s Master of Accounting program. He has extensive experience teaching intermediate accounting at both the undergraduate and graduate levels. Prior to joining Fisher, he was on the faculty at the University of Chicago’s Booth School of Business where he taught financial accounting and financial statement analysis in the full-time, evening, and weekend MBA programs. Professor Roulstone’s research focuses on information intermediaries, information acquisition by investors, and textual analysis of corporate disclosure. He serves on the editorial boards of several accounting journals and is currently an associate editor at Management Science. His research has been published in a variety of leading academic journals including The Accounting Review, Journal of Accounting and Economics, Journal of Accounting Research, Management Science, and Review of Accounting Studies. He is a past president of the American Accounting Association’s Financial Accounting and Reporting Section.


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