Index I-27

treasury, 787–790 proportional method, 840–841 adjusted, 1463

watered, 782 rights to subscribe to additional shares, 842 defined, 1411, 1463
Stock dividends stock right, 842 disclosure of, 1413, 1464
defined, 795 treasury-stock method, 858–859 non-adjusted, 1463
as dividends, 798 Stock-appreciation rights (SARs) nonrecognized, 1412
effects of, 799 accounting for, 863–866 recognized, 1411–1412
entries, 799 advantages of, 863 time periods for, 1411, 1463
fair value, 795 defined, 863 Subsidiaries, 914
importance of, 800 example, 865–866 Subsidiary ledgers, 81
large, 799 share appreciation, 863 Substitution approach, 524
par value, 795, 799 share-based equity awards, 864 Successful-efforts concept, 572–573
reporting, 663 share-based liability awards, 864–865 Summary of Significant Accounting
small (ordinary), 796, 797 Stock-based compensation plans Policies, 225
stock splits versus, 798–799 compensation example, 846–847 Sum-of-the-years’-digits method, 558
weighted-average number of shares compensation expense allocation, 846 Supersession, in retiring assets, 555
outstanding, 853–854 defined, 843 Supplemental balance sheet disclosures
Stock issuance diluted EPS, 858–859 accounting policies, 224, 225
costs of, 782–783 disclosure of, 849–851 in body of the statement, 228
incremental method, 781 elements of, 844 contingencies, 224, 225
in noncash transactions, 781–782 employee stock-purchase plans contractual situations, 224, 225
no-par stock, 779–780 (ESPPs), 849 in cross-reference and contra
with other securities (lump-sum sales), expense determination, 846 items, 229
780–781 fair value method, 844–845, 846 defined, 224
par value stock, 779 grant date, 844, 846 fair values, 224, 226–227
proportional method, 781 IFRS, 844 information, 224
recording receivable and, 783 intrinsic-value method, 844 in notes, 228–229
Stock options. See also Warrants recognition, 846–847 in parenthetical explanations, 227–228
adjustment to net income, 1355 restricted stock, 847–849 risks and uncertainties, 225
antidilutive, 858 service period, 846 in supporting schedules, 229–230
company offering of, 839 Stock-based compensation, valuing, 268 techniques for, 227–230
compensation expense allocation, 846 Stockholders, 1435–1436 Supplementary information, 56–57
controversy, 845 Stockholders’ equity Suppliers, cash payments to, 1349–1350
defined, 834, 843 analysis of, 802–804 Supplies, 94–95
diluted EPS, 858–859 balance sheet presentation of, 214, 800 Supporting schedules
disclosure, 850 book value per share, 803–804 disclosure through, 229–230
example, 846–847 capital stock, 778–779 illustrated, 161, 230
exercise price, 858 columnar format for, 802 income statement, 161
expense determination, 846 components of, 778–779 terminology, 229–230
fair value, 844 comprehensive presentation, 801 Surplus, 230
grant date, 844, 846 contributed (paid-in) capital, 778 Sustainability reporting, 1434–1435
service period, 846 corporate capital, 776–786 Swaps
shift of use of, 834 defined, 212–213, 778–779 defined, 937
treasury-stock method, 858–859 disclosure of restrictions on retained interest rate, 937, 938, 939–940
Stock prices earnings, 800–801 transaction, 937
accounting and, 5 dividend policy, 791–800 System enhancement, 2–3
gross profits and, 458 earned capital, 778
Stock right, 842 GAAP and IFRS comparison, 827–828 T
Stock splits with no treasury stock, 788 T-accounts, 80
defined, 796–797 payout ratio, 803 Take-or-pay contract, 740
effects of, 797 presentation of, 800–802, 829–830 Tangible development costs, 569
investors and, 798 reacquisition of shares, 786–790 Tax allocation, interperiod, 579
stock dividends versus, 798–799 reclassification of, 796 Tax benefit. See also Income tax expense
weighted-average number of shares retained earnings, 778 current, 1072
outstanding, 853–854 return on (ROE), 802–803, 1438 deferred, 1062, 1072
Stock warrants section, 213 recognition of, 1072
antidilutive, 858 statement of changes in equity, 830 Tax credit carryback, 1082
conceptual questions, 841–842 statement of financial position, 829–830 Tax credit carryforward, 1082
convertible bonds and, 842–843 statement of stockholders’ equity, 801–802 Tax deductions, warranty, 1059
defined, 839 surplus, 230 Tax depreciation
detachable, 840, 842 with treasury stock, 789 book depreciation versus, 579
diluted EPS, 858–859 Straight-line method computation of, 577
exercise price, 858 bonds payable, 725 MACRS, 577–579
as form of compensation, 839 depreciation, 557–558 methods, 577–578
incremental method, 841 Strategic shifts, 164 optional straight-line method, 579
issuance of, 839–840 Strict cash basis, 113–114 Tax effect (tax benefit), 1070
issued with other securities, 840–842 Strike price, 926 Tax havens, 776–777
nondetachable, 842 Subsequent events Tax lives (recovery periods), 577
I-28 Index

Tax rates Trade names, 615 Treasury-stock method

average, 1068 Trade notes payable, 661 comprehensive example, 858–859, 867
considerations, 1067–1069 Trade receivables, 329 computation of EPS, 859
corporate, 1069 Trademarks, 615 defined, 858
effective, 1067, 1077 Trading on equity, 803 Trial balance
enacted, 1067 Trading securities column, worksheet, 121
future, 1067–1069 accounting for, 901 defined, 81, 92
global, 1068 defined, 206, 900, 969 illustrated, 92
reconciliation, 1079 fair value, 901, 907–908 preparation procedures, 92
Tax reporting, 1055 fair value adjustment computation, 907 Troubled-debt restructuring
Taxable amounts, 1056 holding gain or loss, 907 computation of loss to creditor on, 747, 748
Taxable income intent in holding, 907 concluding remarks, 749
defined, 1054, 1083 sale of, 908 defined, 744
possible sources of, 1074 shift to held-to-maturity securities, 908 examples, 745
Taxable temporary differences, 1064, 1083 Traditional LIFO, 403 gain for debtor, 748–749
Taxes Transaction analysis, 89 granting of equity interest, 745
Social Security, 666 Transaction approach, income modification of terms, 745–749
unemployment, 667 measurement, 156–157 not gain for debtor, 746–748
Tax-planning strategy, 1083 Transaction price overview of, 743–744
Technology-related intangible assets, 617–619 allocating, 992–994 progression in, 743
Temporary accounts, 109 allocating to performance obligations, 984 schedule of interest and amortization,
Temporary differences consideration paid or payable to 747, 749
classification of, 1113 customers, 991 settlement of debt, 744–745
cumulative, computation of, 1067 defined, 331, 988 transactions, 744
deductible, 1064, 1082 determining, 984, 988–991 transfer of assets, 744–745
deductible amounts, 1056 extended payment terms, 990 Two statement approach, comprehensive
defined, 1055–1056, 1083 measurement of, 331 income, 174, 175
examples of, 1065, 1067 noncash consideration, 990–991
originating, 1065, 1066 residual value allocation, 992 U
reversing, 1065, 1066 revenue constraint, 989 Unappropriated retained earnings, 213, 261
taxable, 1064, 1083 time value of money and, 990 Uncertain tax positions, 1081
taxable amounts, 1056 upfront fee considerations, 1006 Uncollectible accounts
Term bonds, 721 variable consideration, 988–989 allowance method, 334–338
Third-party guarantors, 1203 volume discount, 991 direct write-off method, 334
Three-column account form, 88–89 Transactions estimated, recording, 334–335
Time, in interest computation, 269 anticipated, 933 receivable estimation, 334
Time diagrams defined, 80, 87 recovery of, 336
bond valuation, 294 effect on owners’ equity accounts, 84–85 write-off, recording, 335–336
convertible bonds, 891 identifying and recording, 85–87 Unconditional promise, 522
future value, 275, 276 parking, 394 Underfunded status, 1122, 1123
future value of annuity due, 283, 286 pending, 658 Underlyings, 929
future value of ordinary annuity, 281, 282 recording and summarizing, 87–92 Understandability, 18, 47–48
interest rates, 279 related-party, 1409–1410 Understatement, 1292–1293
interest-bearing notes, 340, 736 revenue, 986 Unearned compensation, 848
number of periods, 278 revenue recognition, 996–1007 Unearned revenues
periods, number of, 278 significant noncash, 1360, 1396 as current liability, 663–664
present value, 277, 278 swap, 937 defined, 98
zero-interest-bearing notes, 339, 733 Transfer of ownership test, 120 entries, 664
Time value, 927 Transfers overstatement of, 1293
Time value of money accounting for, 922 understatement of, 1292–1293
accounts receivable and, 333 related to debt securities, 921–922 Unearned service revenue, 116
annuities (future value), 279–286 Transfers-in, 463 Unemployment taxes, 667
annuities (present value), 286–291 Travel advances, 326 Unexpected gains and losses, 1132
applications of concepts, 268–269 Treasury bills, 326 Unguaranteed residual values. See also
basic concepts, 268 Treasury shared, 260 Residual values
defined, 268 Treasury stock defined, 1216
issues, 291–297 cost method of purchase, 788 lessees, 1219–1220
in public policy debates, 288 defined, 790 lessors, 1221
single-sum problems, 274–279 as not an asset, 787 sales-type leases, 1224
transaction price and, 990 par (stated) value method of purchase, 788 Unit LIFO, 403
Timeliness, 18, 47, 52 purchase, 788–789 Units of production approach, 557
Time-period assumption, 51–52 retirement, 790 Units-of-delivery method, 1014, 1015–1017
Times interest earned, 742–743, 1438 sale above cost, 789–790 Unprofitable contract loss
Timing of revenues, 114 sale below cost, 790 completed-contract method, 1022–1023
Trade accounts payable. See Accounts stockholders’ equity with, 789 Construction in Process account, 1022
payable transactions, 790 defined, 1021
Trade discounts, 331 as unissued capital stock, 787 percentage-of-completion method, 1021–1022
 Index I-29

Unqualified opinion, 1425 Valuation of notes receivable, 342 Wheat Committee, 9

Unrealized gains and losses, 1354–1355 Valuation of property, plant, and equipment With recourse, 345, 346–347
Unrealized holding gain or loss, 344 cash discounts, 513 “With-and-without” method, 891
Unsecured bonds, 720–721 contributions, 521–522 Without recourse, 345, 346
Unusual, gains or losses, 163 deferred-payment contracts, 513–514 Work in process inventory, 388
Upfront fees, 1006 exchanges of nonmonetary assets, 516–520 Working capital, 210–211, 212
Upper limit (ceiling), 448 issuance of stock, 515 Working capital ratio, 687
U.S. Foreign Corrupt Practices Act, 78 lump-sum purchases, 514–515 Worksheets (spreadsheet)
Useful life, 96 overview, 513 adjustments column, 121
prudent cost, 522 adjustments entered on, 123–124
V Valuation Resource Group (VRG), 266–267 to analyze effect of errors in financial
Valuation Value-in-use, 602, 652 statements, 1298
bases, 497–499 Variable consideration, 988–989 balance sheet column, 123–124
of intangible assets, 612 Variable-charge approach, 557 benefits of use, 121
of notes, 732 Variable-rate mortgage, 737 columns, 121–124
Valuation allowance Verifiability, 47 to correct income and balance sheet
deferred tax asset, 1063 Vertical analysis, 1440–1441 errors, 1295
defined, 1063, 1083 Vested benefit obligation, 1121 in financial statement preparation, 124
determination of need, 1074 Vested benefits, 1121 illustrated, 122
disclosure, 1080 Vested rights, 669 income statement column, 123–124
evaluation of, 1063 Virtually certain, 714 in interim financial statements, 113
evidence in considering need for, 1075 Volume discount, 991 pension, 1126–1128
loss carryforward with, 1072–1074 postretirement benefits, 1152–1155
loss carryforward without, 1071–1072 W trial balance column, 121
Valuation of accounts receivable Wages. See Salaries and wages using, 121–124
allowance method, 334–338 Warranties Worksheets (statement of cash flows)
direct write-off method, 334 assurance-type, 677, 1004 accounts receivable (net), 1365
overview, 333–334 costs, 676–678 analysis of transactions, 1363–1368
Valuation of bonds payable defined, 676, 1004 building depreciation and amortization
bonds issued at discount or premium on illustrated, 1005 of trademarks, 1367
interest date, 724–725 as loss contingencies, 678 change in retained earnings, 1363–1365
bonds issued at par on interest date, 724 performance obligations and, 1005 common stock, 1367
bonds issued between interest dates, revenue recognition, 1004–1006 completed, 1368
724–725 service-type, 678, 1004 equipment and accumulated
effective-interest method, 726–730 tax deduction, 1059 depreciation, 1366
face value, 722 types of, 677 final reconciling entry, 1367–1368
overview, 722–723 Warrants format, 1362
stated, coupon, or nominal rate, 722 antidilutive, 858 guidelines, 1361–1362
straight-line method, 725 conceptual questions, 841–842 inventory, 1365
Valuation of inventories convertible bonds and, 842–843 investment in stock, 1365
average-cost method, 399–400 defined, 839 land, 1365–1366
cost flow assumptions, 398–402 detachable, 840, 842 other noncash charges or credits, 1367
cost-basis approach, 386–441 diluted EPS, 858–859 prepaid expenses, 1365
cost-of-goods-sold method, 446 exercise price, 858 preparation of, 1369
disclosure of trade practices, 465 as form of compensation, 839 preparation steps, 1362
first-in, first-out (FIFO) method, 400–401 incremental method, 841 use of, 1361–1369
GAAP and IFRS comparison, 494 issuance of, 839–840 Write-off, goodwill, 621
gross profit method, 455–458 issued with other securities, 840–842
inventory errors and, 416–418 nondetachable, 842 X
inventory goods and costs and, 393–397 proportional method, 840–841 XBRL (eXtensible Business Reporting
issues, 388–392, 442–501 rights to subscribe to additional Language), 1431–1432
last-in, first-out (LIFO) method, 401–416 shares, 842
loss method, 446 stock right, 842 Y
lower-of-cost-or-market, 448–452 treasury-stock method, 858–859 Years-of-service method, 1129
lower-of-cost-or-net realizable value Watered stock, 782
(LCNRV), 444–447 Weighted-average accumulated Z
moving-average method, 399–400 expenditures, 509 Zero-interest debenture bonds, 721
at net realizable gain, 452 Weighted-average method, 399 Zero-interest-bearing notes
presentation and analysis, 464–466 Weighted-average number of shares defined, 338
purchase commitments and, 453–455 outstanding effective-interest method, 340, 733
with relative sales value, 453 computation of, 857 implicit interest rate, 339
retail inventory method, 458–464 defined, 852 long-term notes payable, 732–733
specific identification, 398–399 illustrated, 852, 853, 854 notes payable, 662–663
summary analysis, 415–416 stock dividends, 853–854 time diagram for, 339, 733
weighted-average method, 399 stock splits, 854 Z-scores, 214
 KIESO INTERMEDIATE ACCOUNTING 16E: LIST OF ACCOUNTS

A Cost of Installment Sales Gain on Sale of Land

Costs of Construction Gain on Sale of Machinery
Accounts Payable
Current Maturity of Long-Term Debt Gain on Sale of Plant Assets
Accounts Receivable
Gain on Settlement of ARO
Accrued Liabilities
Goodwill
Accumulated Depreciation D
Green Fees Revenue
Accumulated Depreciation—Buildings Dealer’s Fund Reserve
Accumulated Depreciation—Capital Debt Conversion Expense
Leases Debt Investments I
Accumulated Depreciation—Equipment Deferred Gross Profit Income Summary
Accumulation Depreciation—Machinery Deferred Tax Asset Income Tax Expense
Accumulated Depreciation—Plant Assets Deferred Tax Liability Income Taxes Payable
Accumulated Depreciation—Trucks Delivery Expense Income Taxes Receivable
Adjustment to Record Inventory at Cost Depreciation Expense Income Tax Refund Receivable
Administrative Expenses Direct Labor Installment Accounts Receivable
Admissions Revenue Discount on Bonds Payable Installment Sales Revenue
Advances to Employees Discount on Notes Payable Insurance Expense
Advertising Expense Discount on Notes Receivable Insurance Premium Payable
Allowance for Doubtful Accounts Dividend Receivable Insurance Revenue
Allowance for Expropriation Dividend Revenue Intangible Assets
Allowance for Sales Returns and Dividends Interest Expense
Allowances Dividends Payable Interest Payable
Allowance to Reduce Deferred Tax Asset Due from Factor Interest Receivable
to Expected Realizable Value Due to Customer Interest Revenue
Allowance to Reduce Inventory to LIFO Dues Revenue Inventory
Allowance to Reduce Inventory to Market Inventory of Premiums
Amortization Expense
E Inventory on Consignment
Asset Retirement Obligation Inventory Over and Short
Entertainment Expense
Investment Revenue
Equipment
B Investments
Equity Investments
Investments in Common Stock
Bad Debt Expense Estimated Inventory Returns
Investments in Stocks and Bonds
Benefit Due to Loss Carryback Estimated Liability on Purchase
Benefit Due to Loss Carryforward Commitments
Billings on Construction in Process Executory Costs L
Bond Issue Expense Executory Costs Payable Land
Bond Sinking Fund Land Improvements
Bonds Payable F Lawsuit Liability
Buildings Lawsuit Loss
Factory Overhead
Lease Liability
Fair Value Adjustment
Lease Receivable
C FICA Taxes Payable
Leased Buildings
Finance Charge
Call Option Leased Equipment
Finance Expense
Cash Liability under Stock-Appreciation Plan
Finance Revenue
Cash Over and Short Litigation Expense or Loss
Finished Goods Inventory
Cash Surrender Value of Life Insurance Litigation Liability
Franchise Revenue
Coal Mine Loss Due to Market Decline
Franchises
Commission Expense of Inventory
Freight-In
Commission Payable Loss from Expropriation
Freight-Out
Commission Revenue Loss from Long-Term Contracts
FUTA Taxes Payable
Common Stock Loss on ARO Settlement
Futures Contract
Common Stock Dividend Distributable Loss on Capital Lease
Compensation Expense Loss on Disposal of Equipment
Computer Software Costs G Loss on Disposal of Land
Construction Expenses Gain on Disposal of Equipment Loss on Disposal of Machinery
Construction in Process Gain on Disposal of Land Loss on Disposal of Plant Assets
Contract Asset Gain on Disposal of Machinery Loss on Disposal of Trucks
Contract Liability Gain on Disposal of Plant Assets Loss on Impairment
Contribution Expense Gain on Disposal of Trucks Loss on Investments
Contribution Revenue Gain on Redemption of Bonds Loss on Redemption of Bonds
Convertible Preferred Stock Gain on Repossession Loss on Repossession
Copyrights Gain on Restructuring of Debt Loss on Sale of Investments
Cost of Goods Sold Gain on Sale of Investments Loss on Sale of Receivables
Loss on Settlement of Call Option Postretirement Expense Service Revenue
Loss on Settlement of Put Option Preferred Stock Shipping Expense
Premium Expense Supplies
M Premium Liability Supplies Expense
Premium on Bonds Payable SUTA Taxes Payable
Machinery
Prepaid Advertising Swap Contract
Maintenance and Repairs Expense
Prepaid Expenses
Materials
Prepaid Insurance
Memo entry T
Prepaid Lease Executory Costs
Miscellaneous Expense
Prepaid Rent Telephone and Internet Expense
Mortgage Payable
Property Dividends Payable Timber
Property Tax Expense Timberland
N Property Taxes Payable Trademarks
No entry Purchase Discounts Trade Names
Noncontrolling Interest Purchase Discounts Lost Trading Securities
Notes Payable Purchase Returns and Allowances Travel Expense
Notes Receivable Purchases Treasury Stock
Put Option Trucks
O
Office Expense R U
Oil Platform Raw Materials
Unamortized Bond Issue Costs
Operating Expenses Realized Gross Profit
Unearned Admissions Revenue
Organization Expense Recourse Liability
Unearned Advertising Revenue
Other Comprehensive Income (G/L) Recovery of Loss from Impairment
Unearned Compensation
Other Comprehensive Income (PSC) Rent Expense
Unearned Dues Revenue
Other Expense Rent Payable
Unearned Football Ticket Revenue
Other Revenue Rent Receivable
Unearned Franchise Revenue
Owner’s Capital Rent Revenue
Unearned Profit on Sale-Leaseback
Owner’s Drawings Repossessed Merchandise
Unearned Rent Revenue
Research and Development Expense
Unearned Revenue
P Restricted Cash
Unearned Sales Revenue
Retained Earnings
Paid-in Capital from Treasury Stock Unearned Service Revenue
Returnable Deposit
Paid-in Capital in Excess of Par— Unearned Subscriptions Revenue
Returned Inventory
Common Stock Unearned Warranty Revenue
Revenue from Consignment Sales
Paid-in Capital in Excess of Par— Union Dues Payable
Revenue from Franchise Fees
Preferred Stock Unrealized Holding Gain or
Revenue from Investment
Paid-in Capital in Excess of Stated Loss—Equity
Revenue from Long-Term Contracts
Value—Common Stock Unrealized Holding Gain or
Paid-in Capital—Expired Stock Options Loss—Income
Paid-in Capital—Stock Options S Utilities Expenses
Paid-in Capital—Stock Warrants Salaries and Wages Expense
Patents Salaries and Wages Payable
Payroll Tax Expense Sales Commission Expense W
Payroll Taxes Payable Sales Commissions Payable Warranty Expense
Pension Asset/Liability Sales Discounts Warranty Liability
Pension Expense Sales Discounts Forfeited Warranty Payable
Pension Obligation Sales Returns and Allowances Warranty Revenue
Petty Cash Sales Revenue Withholding Taxes Payable
Plant Assets Sales Tax Expense Work-in-Process
Postage Expense Sales Taxes Payable Write-Off of Goodwill
Postretirement Asset/Liability Selling Expenses Write-Off of Inventory
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