ACCOUNTING 470

ADVANCED EXTERNAL
FINANCIAL REPORTING
ISSUES; Syllabus – Spring 2016

14115R ; MW: 10 am –11:50 am

Professor: William W. Holder

Office: ACC 101
E-mail: [email protected]
Office Phone: (213) 740-4838

Office Hours:
Mondays and Wednesdays: 9 am - 10 am
and 2pm - 3 pm and by appointment

Course Description
Developing capabilities to identify and articulate current external financial reporting problems and issues,
concentrating on operating, financing, and investing activities of business organizations.

Learning Objectives
This course focuses on problems and issues related to the reporting and disclosure of external financial
accounting information (i.e., financial accounting information in firms’ external financial reports such as SEC
Form 10-K). As such, it is an extension of intermediate financial accounting. The objectives and expected
learning outcomes of the course include the following:

By the time students finish this course, they should be able to

 Develop capabilities to identify and articulate current external financial reporting problems and issues,
concentrating on operating, financing, and investing activities of business organizations by solving
problems and analyzing transactions.

 Be able to use accounting information, including the underlying rules required to prepare and report this
information by using the FASB Codification and other authoritative sources (SEC), to analyze, guide
and support a position taken on complex accounting cases.

 Analyze accounting information from the perspective of its various users (stakeholders) such as equity
investors, creditors, company management and auditors, by preparing written and oral presentations
based on information presented in cases, SEC Filings, articles discussing emerging accounting issues.

 Identify and describe differences between the various forms of business combinations by preparing
business combinations worksheets resulting in the preparation of consolidated financial statements.

 Recognize and explain differences between U.S. and International Financial Reporting Standards (IFRS)
by using the FASB Codification, other U.S. authoritative sources to compare, identify and articulate
areas of convergence and disagreement with IFRS.

Marshall Undergraduate Course Syllabus—Page 1 of 12

  Apply ethical principles and professional standards in analyzing situations and making informed
decisions.

STUDENT LEARNING OBJECTIVES

OBJ 1 Technical, Students will expand their critical thinking and problem
Conceptual, solving skills learned in introductory and intermediate
Heavy Problem- accounting courses.
Solving
Knowledge
OBJ 2 Research, Students will use academic/professional literature to
Analysis, and build their knowledge of and analyze complexities of
Heavy Critical business internal and external accounting
Thinking requirements.

OBJ 3 Ethical Students will apply ethical principles and professional

Decision standards in decision making.
Medium Making
OBJ 4 Communication Students will continue to strengthen their ability to
communicate ideas clearly and strategically, after
Medium considering the relevant audience, situation and
purpose of the communication.
OBJ 5 Leadership, Students will demonstrate leadership skills and the
Collaboration, ability to work cooperatively and productively to
Medium and accomplish established goals.
Professionalism

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REQUIRED TEXTBOOKS (obtainable from USC Bookstore):

Kieso, Weygandt, Warfield, Intermediate Accounting, Fifteenth Edition

Hoyle, Shafer & Doupnik, Advanced Accounting, Eleventh Edition

Access to FASB Codification (“ASC”)

RECOMMENDED OTHER COURSE MATERIALS:

Dictionary

Supplemental material: Problem Solving Survival Guides volume 1 (Chs. 1-14) and volume 2 (Chs. 15-28). The
survival guides contain additional problems you can do, and excellent descriptions of how to solve each
problem. Although no formal assignments will be given from the guides, doing additional problems in the
guides will help you better understand the course material.

Prerequisites and/or Recommended Preparation:

For successful performance in ACCT 470, completion of ACCT 370 is required.

Course Notes: Note that solutions to assigned homework and in-class exercises will be posted on blackboard
the weekend after the assignment is due and/or exercise/problem was discussed in class.

Grading Policies:
All graded written assignments and examinations will be returned promptly to students. Unclaimed items will
be retained by the instructor until the last day of the following semester (excluding summer term), then
discarded.

The mid-term examinations are 1hour and fifty minutes in length. The final examination is two hours in length.
Examinations are not cumulative. The examinations normally include essay questions and problems. Grades
on examinations are NOT NEGOTIABLE. No “makeup” examinations will be given; an unexcused absence
from an examination results in a grade of “0” on the examination.

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 ASSIGNMENTS AND GRADING DETAIL

The average grade in this course will be in accordance with Leventhal School of Accounting Standards.

The following weights will be assigned for determination of final grades:

Written assignments, if any and Participation........................ 5%

Group Project………………………………………………. 10%
Two Mid-Term Examinations.......…………………….…… 60%
Final examination.........................................................……. 25%
Total…………………………………….………………… 100%

The +/- grading system will be used. (See attached "Leventhal School of Accounting Grading and Academic
Standards.") Final grades are obtainable only through self-addressed postcard or envelope or through USC's
formal grade report; they are not obtainable from the Leventhal School of Accounting Staff. Final grades are
NOT NEGOTIABLE.

Final grades represent how you perform in the class relative to other students. Your grade will not be
based on a mandated target, but on your performance. Historically, the average grade for this class is
about a (B+). Three items are considered when assigning final grades:
1. Your average weighted score as a percentage of the available points for all assignments (the points
you receive divided by the number of points possible).
2. The overall average percentage score within the class.
3. Your ranking among all students in the class.

Assignment Submission Policy:

Any assignment turned in late, even if by only a few minutes, will receive a grade deduction (for example, if
your work is a B+ grade, you will be given a C+ grade). You must deliver a hard copy at the beginning of class
on that day. If you are unable to attend class on that day, make arrangements for it to be delivered to the
classroom or to my box by the start of class. Late or not, however, you must complete all required assignments
to pass this course.

STUDENT OBLIGATIONS:

1. Attend all classes on time. (See SCampus 2002-2003, p. 78, B2. )

(NO MAKE-UP EXAMINATIONS WILL BE GIVEN; UNEXCUSED ABSENCE FROM AN
EXAMINATION RESULTS IN A GRADE OF “O” ON THE EXAM.)

2. Submit all written assignments, prepared on a word processor, on the date assigned and in good form.
(See ES Rule 13). Written assignments submitted late will be graded 0, except for excused absences.
Also see pages 5 and 6 hereof. Students who do not turn in a solution to a case study on which a mid-
term or final examination question is based will receive no credit for an answer to the examination
question.

3. Staple written assignment sheets. Students are responsible for complying with the English grammar,
style, and usage rules in Chapters I and II of The Elements of Style and in the attached essay "Thoughts
on Writing" in written assignments. Written assignments will be returned after being graded on a scale
Marshall Undergraduate Course Syllabus—Page 4 of 12
 of 4 = Excellent, 3 = Good, 2 = Fair, 1 = Poor, 0 = No Credit; grades on case assignments are NOT
NEGOTIABLE. (The 4, 3, 2¸ and 1 are not to be construed as A, B, C, and D.) Annotations of “ES”
(The Elements of Style), “TW” (“Thoughts on Writing”), and “1 (a),” “3,” etc. (p.5 hereof) should be
studied to help students improve their writing skills. Students may consult informally with each other,
and they may do any desired research, in completing written assignments; however, written assignments
must be the students’ own work, and any cited material must be properly footnoted. (Please see
definition of plagiarism at Section 11.11.)

Add/Drop Process

Retention of Graded Coursework

All graded written assignments and examinations will be returned promptly to students. Unclaimed items will
be retained by the instructor until the last day of the following semester (excluding summer term), then
discarded.

Statement for Students with Disabilities

Students need to make a request with Disability Services and Programs (DSP) for each academic term that
accommodations are desired. Guidelines for the DSP accommodation process can be found here:
https://sait.usc.edu/academicsupport/centerprograms/dsp/registration/guidelines/guidelines_general.html

Students requesting test-related accommodations will need to share and discuss their DSP recommended
accommodation letter/s with their faculty and/or appropriate departmental contact person at least three weeks
before the date the accommodations will be needed. Additional time may be needed for final exams. Reasonable
exceptions will be considered during the first three weeks of the semester as well as for temporary injuries and
for students recently diagnosed. Please note that a reasonable period of time is still required for DSP to review
documentation and to make a determination whether a requested accommodation will be appropriate.
(https://sait.usc.edu/academicsupport/centerprograms/dsp/registration/accommodationletters_howto.asp)

Any student requesting academic accommodations based on a disability is required to register with Disability
Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be
obtained from DSP. Please be sure the letter is delivered to me. DSP is located in STU 301 and is open 8:30
a.m.–5:00 p.m., Monday through Friday. The phone number for DSP is (213) 740-0776. For more information
visit www.usc.edu/disability.

Marshall Undergraduate Course Syllabus—Page 5 of 12

Statement on Academic Integrity
USC seeks to maintain an optimal learning environment. General principles of academic honesty include the
concept of respect for the intellectual property of others, the expectation that individual work will be submitted
unless otherwise allowed by an instructor, and the obligations both to protect one’s own academic work from
misuse by others as well as to avoid using another’s work as one’s own. All students are expected to understand
and abide by these principles. SCampus, the Student Guidebook, (www.usc.edu/scampus or
http://scampus.usc.edu) contains the University Student Conduct Code (see University Governance, Section
11.00), while the recommended sanctions are located in Appendix A.

Students will be referred to the Office of Student Judicial Affairs and Community Standards for further review,
should there be any suspicion of academic dishonesty. The Review process can be found at:
http://www.usc.edu/student-affairs/SJACS/ . Failure to adhere to the academic conduct standards set forth by
these guidelines and our programs will not be tolerated by the USC Marshall community and can lead to
dismissal.

Classroom Rules of Conduct

 Cell phone use of any kind (e.g., voice, text messaging, calculator, photography) is strictly banned
during class. (During exams, any cell phone use or other external electronic communication will
automatically constitute cheating.)
 Cell phones must be turned off.
 Music players and other electronic devices, other than for taking notes using a computer, are not
permitted during class.
 Be courteous to your fellow students by not making distractions (e.g., coming to class late, eating,
talking, paging through newspapers).

LEVENTHAL SCHOOL OF ACCOUNTING HONOR CODE:

Per Article II of the Student Honor Code, “All students enrolled in upper division and graduate courses required
for a degree in Accounting and offered by the Leventhal School of Accounting…are subject to the Code…” If
you have questions about any Honor Code matters (e.g., will my proposed conduct comply?); please see me.

Emergency Preparedness/Course Continuity

In case of a declared emergency if travel to campus is not feasible, USC executive leadership will announce an
electronic way for instructors to teach students in their residence halls or homes using a combination of
Blackboard, teleconferencing, and other technologies.

Please activate your course in Blackboard with access to the course syllabus. Whether or not you use
Blackboard regularly, these preparations will be crucial in an emergency. USC's Blackboard learning
management system and support information is available at blackboard.usc.edu.

A mark of IN (incomplete) may be assigned when work is not completed because of a documented illness or
other “emergency” that occurs after the 12th week of the semester (or the twelfth week equivalent for any course
that is scheduled for less than 15 weeks).

An “emergency” is defined as a serious documented illness, or an unforeseen situation that is beyond the
student’s control, that prevents a student from completing the semester. Prior to the 12th week, the student still
has the option of dropping the class. Arrangements for completing an IN must be initiated by the student and
agreed to by the instructor prior to the final examination. If an Incomplete is assigned as the student’s grade,
Marshall Undergraduate Course Syllabus—Page 6 of 12
the instructor is required to fill out an “Assignment of an Incomplete (IN) and Requirements for
Completion” form (http://www.usc.edu/dept/ARR/grades/index.html) which specifies to the student and to the
department the work remaining to be done, the procedures for its completion, the grade in the course to date,
and the weight to be assigned to work remaining to be done when the final grade is computed. Both the instructor and
student must sign the form with a copy of the form filed in the department. Class work to complete the course must be
completed within one calendar year from the date the IN was assigned. The IN mark will be converted to an F grade
should the course not be completed.

Marshall Undergraduate Course Syllabus—Page 7 of 12

 COURSE AND EXAMINATION SCHEDULE

DATE TOPIC TEXT READING WRITTEN ASSIGNMENTS

M 1/11 Introduction

Revenue and Gains

W 1/13 Revenue recognition; IA Ch 18 IA Ex 18-6, 18-8, 18-22, 18-21
Basics, SEC guidance, CON 6, ¶s 78-79, 82
Installment Method, CON 5, ¶s 83-84
Cost Recovery Method, ASC 605-10-25
Repossession, Interest ASC 605-15
Revenue
M 1/18 MLK Day Univ Holiday
W 1/20 Percentage of SEC Topic 13 IA C 18-6, Ex. 18-4, P18-2
completion,
Completed contract,
M 1/25 Franchises, Multi- ASC 310-20 IA Ex 18-21, 8-11, 18-27
element contracts, ASC 470-40
Financial instruments ASC 605-25, -45
A look to the future ASC 922
ASC 928
ASC 952
FASB Exposure
Draft

Employee Compensation
W 1/27 Pension Plans Ch 20 IA Ex. 20-2; Ex. 20-4; Ex. 20-6
ASC 715-30-05 IA Ex. 20-9
ASC 715-60-05 Ex. 20-10, Ex. 20-11; Ex 20-13
ASC 710 Ex. 20-11,
ASC 712 Ex. 20-13
ASC 715
IA Ch 20
M 2/1 Pension Plans, Ch 20, continued Ex. 20-22,
continued Ex. 20-23,
Ex. 20-24
W 2/3 Other Post-Retirement
Benefits

Compensated Absences ASC 710-10-25-1 Ex. 16-12

IA 16, pp 891-899
Stock Based ASC 718-10-10 Ex. 13-6
Compensation IA 13, pp702-714

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 Foreign Activities
M 2/8 Foreign currency ASC 718-740-30-2 Adv. Acc. Pr. Ch. 9- 25, 29
transactions, forward ASC 470-20-05, -25,
contracts. -30
Hoyle Ch. 9
W 2/10 Foreign Currency Hoyle. Ch. 10 Adv. Acc. Pr. Ch. 10- 25.
Translation
W 2/17 EXAM 1 (In-Class)

Business Combinations
M 2/22 Investments & Business IA Ch 17 IA Ex. 17,15, 17-9,17-10, 17-12, 17-18
Combinations ASC 320-10-05, -10,
-15, -20, -30, -35, -50
ASC 323-10-05, -15,
-25, -35
ASC 325-10-05
ASC 325-20-05, -25,
-35
ASC 810-10-15
ASC 958-810-60
ASC 958-20-60
ASC 970-810-25
ASC 942-320-50
Hoyle Ch. 1 & 2
W 2/24 Business Combinations Hoyle Ch. 1 & 2; Pr1-23, 1-24, 1-26, 1-27; FASB 94 Research
ASC 805-10-05, -10, Case pg. 34
-15, -25, -50 Pr. 2-19, 2-23, 2-27, 2-33, 2-35
ASC 805-20-25, -30,
-40
ASC 805-30-25, -30
M 2/29 Consolidations: Date of Hoyle Ch. 3 & 4 Pr. 4-31, 4-37, 4-41
Combination
W 3/2 Consolidations: Hoyle Ch. 4
Subsequent to
Combination
M 3/7 Consolidations: Hoyle Ch. 5 Pr. 5-27, 5-28, 5-31
Subsequent to
Combination
W 3/9 Earnings Per Share ASC 470-20-25 IA: Ex 16-1, 2, 7, 10
(EPS) ASC 470-20-30
ASC 470-20-45
M 3/21 Earnings Per Share ASC 260-10-45-2 Ex 16-11, 15, 16, 23, 24, 26
(EPS) ASC 260-10-50
W 3/23 EXAM II (In-Class)

Marshall Undergraduate Course Syllabus—Page 9 of 12

 Other Activities
M 3/28 Accounting for Income ASC 740-10-30-18 IA Ex. 19-2, 3, 4, 9, 10
Taxes ASC 740-10-30-21
ASC 740-10-30-22

W 3/30 Accounting for Income ASC 740-10-25-6 IA Ex. 19-16, 23, 21

Taxes
M 4/4 Accounting for Income ASC 740-10-05 PR 19-1, 19-4
Taxes

W 4/6 Disclosure in Financial IA Ch 24 Ex. 3

Reporting

Disclosure
M 4/11 Disclosure in Financial IA Ch 24 CA 24-3
Reporting:
Related Parties, ASC 850-10-5
Subsequent events, ASC 855-10-5
Going Concern ASC 205-30
Summary of Significant
Accounting Policies

Governmental/ Not-For-Profit
W 4/13 Governmental Hoyle Ch 16 Pr. 46 and 52
Accounting Handouts
M 4/18 Governmental Hoyle Ch 17 Pr. 31 and 48
Accounting
Nonprofit organizations
W 4/20 Accounting for Hoyle Ch. 18 Pr. 41
Nonprofit organizations
M 4/25 Group Presentations
and Discussion
W 4/27 Group Presentations Last Day of Classes
and Discussions
5/9 Final exam Monday,
FINAL May 9
EXAM
8:00am-10:00am

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Why learn IFRS?
International Financial Reporting Standards, commonly referred to as IFRS, are gaining momentum as
the global norm in financial reporting. Issued by the London-based International Accounting Standards Board
(IASB), IFRS is currently accepted in approximately 100 countries, including the members of the European
Union, Israel and Australia. Many other countries, such as Canada, Mexico, India and Japan have committed to
adopt or converge with IFRS by dates ranging from 2009 to 2011.

For years, the Financial Accounting Standards Board (FASB) has been working with the IASB as part of
a long term plan toward convergence of IFRS and U.S. Generally Accepted Principles (U.S. GAAP) with the
2007 decision of the U.S. Securities and Exchange Commission (SEC) to accept IFRS financial statements for
foreign filers (without requiring reconciliation to U.S. GAAP), the timeline for U.S. adoption of IFRS is
expected to accelerate at a rapid pace. In response to the SEC’s decision, accountants, managers and analysts
began to question when the SEC would allow, or require, U.S. companies to use IFRS for their annual filings.
While the answer to this question is still unknown, other ripple effects of the SEC’s decision can already be
seen. In May 2008, the AICPA expressed its intent to incorporate IFRS into the CPA exam. In the same month,
the AICP also amended Rules 202 and 203 of the Code of Professional Conduct to recognize the IASB as an
international accounting standard, allowing accountants of private US companies to prepare financial statements
in accordance with IFRS.

Introduction to IFRS
Historically, multinational and global companies were required to prepare separate financial statements
for each country in which they did business, in accordance with each country’s generally accepted accounting
principles. In 1973, the International Accounting Standards Committee (IASC) was formed in response to the
growing need to develop a set of common financial standards to address the global nature of corporate
financing. In 2000, the IASC received support from the International Organization of Securities Commissioners
(IOSCO), primary forum for international cooperation among securities regulator. The IOSCO recommended its
members (currently 181 organizations including the U.S. Securities & Exchange Commission and the
Committee of European Securities Regulators) permit multinational companies to use IASC standards along
with a reconciliation to national GAAP. In 2001, the IASC reorganized as the International Accounting
Standards Board to incorporate representatives from national standard-setting organizations.

The term IFRS has both a narrow and broad definition. Narrowly, it refers to the specific set of
numbered publications issued by IASB. Broadly it refers to all publications approved by the IASB, including
standards and interpretations issued by its predecessor, the IASC. Unlike U.S. GAAP, there is no hierarchy to
IFRS guidance. All standards and interpretations have equal levels of authoritativeness.
Status in the U.S.

The continuing globalization of business means many U.S. companies (operating or obtaining capital in
foreign countries), including 40% of Global Fortune 500, are already affected by IFRS. In response to this
trend, efforts have been under way to coverage IFRS and U.S. GAAP since 2002. The IASB and FASB have
worked together closely and developed a plan for convergence of the two sets of standards. Main areas of
differences with U.S. GAAP are summarized below:
 Areas where IFRS and U.S. GAAP are not converged:
Consolidation policy, impairment, liabilities, intangibles
 Areas where there are differences in the “details”:
Revenues, income taxes, leases, pensions, business combinations, share-based payments

Marshall Undergraduate Course Syllabus—Page 11 of 12

 Despite the progress toward convergence, the financial information reported by a company may differ
significantly under the two sets of standards. Historically, the SEC has allowed foreign companies trading stock
on U.S. exchanges to prepare Form 20-F, their annual financial statements, in accordance with a foreign GAAP
as long as reconciliation to U.S. GAAP was included. A review of 2006 reconciliations determined that
approximately 2/3 of companies have higher income under IFRS, with a median increase of 12.9%. For the 1/3
of firms with lower income under IFRS, the median difference was 9.1%.
As previously mentioned, the SEC eliminated the reconciliation requirement for foreign private issuers
using IFRS in November 2007. The SEC is currently considering allowing U.S. companies the option of
using IFRS in the near future.

Pros and Cons

While many now believe the adoption of IFRS in the U.S. is inevitable, including the AICPA, the SEC
and the Big Four accounting firms, not everyone agrees this is in the best interest of the American public.
Advocates for the U.S. adoption of IFRS believe one global set of standards will streamline costs for U.S.
companies operating globally and increase comparability of financial statements between companies, resulting
in lower costs of capital.
On the other hand, many people are concerned that IFRS is not as robust as U.S. GAAP, that the cost of
transition will be high, and that the U.S. market is not prepared for the transition. Based on the similar
transition in Europe, experts estimate the implementation of IFRS will take companies two to three years. This
includes time to gather the necessary information, modify accounting and control systems, and possibly
renegotiate debt and other agreements linked to financial performance. An additional concern is the lack of
accounting professionals familiar with IFRS. Knowledge of IFRS will be a valuable asset as you enter the
workplace during this time of dynamic change in the accounting environment.

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