1. The Economic and Institutional Setting for Financial Reporting.
Why Financial Statements Are Important. Economics of Accounting Information. A Closer Look at Professional Analysts. The Rules of the Financial Reporting Game. An International Perspective. Challenges Confronting the Analyst.
2. Accrual Accounting and Income Determination.
Example: Cash versus Accrual Income Measurement. Measuring Profit Performance: Revenues and Expenses. Income Statement Format and Classification. Comprehensive Income.
3. Additional Topics in Income Determination.
Revenue Recognition Prior to Sale. Revenue Recognition Subsequent to Sale. Earning Management.
4. Structure of the Balance Sheet and Statement of Cash Flows.
Classification Criteria and Measurement Conventions for Balance Sheet Accounts. Statement of Cash Flows.
5. Essentials of Financial Statement Analysis.
Basic Approaches. Quaker Oats Company—An illustration. Profitability, Competition, and Business Strategy. Return on Equity and Financial Leverage.
6. The Role of Financial Information in Valuation.
Corporate Valuation. Research on Earnings and Equity Valuation. Valuing a Business Opportunity (An Illustration). Cash Flow Analysis and Credit Risk.
7. The Role of Financial Information in Contracting.
Conflicts of Interest inBusiness Relationships. Lending Agreements and Debt Covenants. Management Compensation. Regulatory Agencies. Analytical Insights: Identifying “Managed” Earnings.
Assessing the Net Realizable Value of Accounts Receivable. Imputed Interest on Trade Notes Receivable. Accelerating Cash Collection: Selling Receivables and Collateralized Borrowings. Troubled Debt Restructuring.
An Overview of Inventory Accounting Issues. Determining Inventory Quantities. Items Included in Inventory. Costs Included in Inventory. Absorption Costing Versus Variable Costing. Cost Flow Assumptions: The Concepts. Inflation, LIFO Reserves, and the LIFO Effect on Income. LIFO Liquidation. Eliminating LIFO Ration Distortions. Tax Implications of LIFO. Eliminating Realized Holding Gains for FIFO Firms. Inventory Errors. Analytical Insights: LIFO Dangers. Empirical Evidence on Inventory Policy Choice.
10. Long-Lived Assets and Depreciation.
Measuring the Carrying Amount of Long-Lived Assets. Long-Lived Asset Measurement Rules Illustrated. Financial Analysis and Fixed Asset Reporting. Intangible Assets. A Case Study of Ambiguities in Capitalization Criteria: Oil and Gas Exploration Costs. Asset Impairment. Obligations Arising from Retiring Long-Lived Assets. Depreciation. International Perspective.
11. Financial Instruments as Liabilities.
Bonds Payable. Managerial Incentives and Financial Reporting for Debt. Incentives for Off-Balance Sheet Liabilities. Hedging. Loss Contingencies.
12. Financial Reporting for Leases.
Evolution of Lease Accounting. Lessee Accounting. Lessor Accounting. Additional Leasing Aspects.
13. Income Tax Reporting.
Understanding Income Tax Reporting. Using Footnote Disclosures to Improve Financial Analysis.
14. Pensions and Postretirement Benefits.
Financial Reporting for Pensions. Postretirment Benefits Other than Pensions. Are Pension and Other Postretirment Benefits (OPEB) Disclosures Useful? The Research Evidence.
15. Financial Reporting for Owners' Equity.
Appropriate Income Measurement. Compliance with Contract Terms. Legality of Corporate Distributions. Earnings per Share. Accounting for Stock-Based Compensation. Convertible Debt.
16. Intercorporate Equity Investments.
Minority Ownership. Majority Ownership. Foreign Subsidiaries.
17. Statement of Cash Flows.
Statement Format. Preparing the Cash Flow Statement. Reconciling Between Statements: Some Complexities. Analytical Insights: Cash Burn Rate of Internet Stocks.
18. Overview of International Financial Reporting Differences and Inflation.
An International Financial Reporting Map. Inflation Accounting.
Appendix I. Present Value Tables.
Appendix II. WWW/Electronic Resources for Financial Information..