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62 Pages

### Ch22

Course: AIM 6330, Fall 2010
School: UT Dallas
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Word Count: 28841

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NTI CHAPTER 22 ACCOU NG C HANG E S AN D ER ROR ANALYSIS LEARNING OBJECTIVES After studying this chapter, you should be able to: 1 2 3 4 5 6 7 8 9 Identify the types of accounting changes. Describe the accounting for changes in accounting principles. Understand how to account for retrospective accounting changes. Understand how to account for impracticable changes. Describe the accounting for changes in...

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UT Dallas - AIM - 6330
CHAPTER23STATEMENT OF CASH FLOWSLEARNING OBJECTIVESAfter studying this chapter, you should be able to:1 2 3 4 5 6 7 8 9Describe the purpose of the statement of cash flows. Identify the major classifications of cash flows. Differentiate between net i
UT Dallas - AIM - 6330
CHAPTER24FU LL D ISC LOSU R E I N FI NANC IAL R EPORTI NGLEARNING OBJECTIVESAfter studying this chapter, you should be able to:1 2 3 4 5 6 7 8Review the full disclosure principle and describe implementation problems. Explain the use of notes in fina
UT Dallas - AIM - 6330
CHAPTER2CO N C E PTUA L F R A M EWO R K U N DER LYI NG F I NANC I AL ACCOU NTI NGLEARNING OBJECTIVESAfter studying this chapter, you should be able to:1 2 3 4 5 6 7 8Describe the usefulness of a conceptual framework. Describe the FASBs efforts to co
UT Dallas - AIM - 6330
CHAPTER 24Full Disclosure in Financial ReportingASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics * 1. * 2. * 3. * 4. * 5. * 6. * 7. * 8. *9. *10. *11. *12. *13. *14. *15. *16. *17. The disclosure principle; type of disclosure. Role of notes that accomp
UT Dallas - AIM - 6330
CHAPTER 3The Accounting Information SystemASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. 2. 3. 4. 5. 6. 7. 8. *9. *1 0. Worksheet. *1 1. *These topics are dealt with in an Appendix to the Chapter. 22 21, 22, 23 11 Transaction identification. Nomin
UT Dallas - AIM - 6330
CHAPTER 4Income Statement and Related InformationASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1 Income measurement concepts. Questions 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 18, 28, 31, 32, 33, 36 1 1, 2, 7 Brief Exercises Exercises Problems Concepts for A
UT Dallas - AIM - 6330
CHAPTER 5Balance Sheet and Statement of Cash FlowsASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Disclosure principles, uses of the balance sheet, financial flexibility. Classification of items in the balance sheet and other financial statements.
UT Dallas - AIM - 6330
CHAPTER 6Accounting and the Time Value of MoneyASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. 2. 3. Present value concepts. Use of tables. Present and future value problems: a. Unknown future amount. b. Unknown payments. c. Unknown number of perio
UT Dallas - AIM - 6330
CHAPTER 7Cash and ReceivablesASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. 2. Accounting for cash. Accounting for accounts receivable, bad debts, other allowances. Questions 1, 2, 3, 4, 21, 22, 23, 24 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 20
UT Dallas - AIM - 6330
CHAPTER 8Valuation of Inventories: A Cost-Basis ApproachASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Inventory accounts; determining quantities, costs, and items to be included in inventory; the inventory equation; balance sheet disclosure. Perp
UT Dallas - AIM - 6330
CHAPTER 10Acquisition and Disposition of Property, Plant, and EquipmentASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Valuation and classification of land, buildings, and equipment. 2. Self-constructed assets, capitalization of overhead. 3. Capita
UT Dallas - AIM - 6330
CHAPTER 11Depreciation, Impairments, and DepletionASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Depreciation methods; meaning of depreciation; choice of depreciation methods. 2. Computation of depreciation. 3. Depreciation base. 4. Errors; change
UT Dallas - AIM - 6330
CHAPTER 12Intangible AssetsASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Intangible assets; concepts, definitions; items comprising intangible assets. Patents; franchise; organization costs; trade name. Goodwill. Impairment of intangibles. Resear
UT Dallas - AIM - 6330
CHAPTER 13Current Liabilities and ContingenciesASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Concept of liabilities; definition and classification of current liabilities. 2. Accounts and notes payable; dividends payable. 3. Short-term obligations
UT Dallas - AIM - 6330
CHAPTER 14Long-Term LiabilitiesASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Long-term liability; classification; definitions. 2. Issuance of bonds; types of bonds. 3. Premium and discount; amortization schedules. Questions 1, 10, 14, 20, 23, 24,
UT Dallas - AIM - 6330
CHAPTER 15Stockholders EquityASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Stockholders rights; corporate form. 2. Stockholders equity. Questions 1, 2, 3 4, 5, 6, 16, 17, 18, 29, 30, 31 7, 10 8, 9 11, 12, 17 3, 13, 14, 15 3 7, 10, 16, 17 1, 2, 4,
UT Dallas - AIM - 6330
CHAPTER 16Dilutive Securities and Earnings Per ShareASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. 2. 3. Convertible debt and preferred stock. Warrants and debt. Stock options, restricted stock. Earnings Per Share (EPS)terminology. EPSDetermining
UT Dallas - AIM - 6330
CHAPTER 17InvestmentsASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Debt securities. (a) (b) (c) Held-to-maturity. Trading. Available-for-sale. Questions 1, 2, 3, 13 4, 5, 7, 8, 10, 13, 21 4, 6, 7, 8, 10, 21 4, 7, 8, 9, 10, 11, 21 8, 9 1, 12, 16 7
UT Dallas - AIM - 6330
C HAPTER 18Revenue RecognitionASSIGNMENT CLASSIFICAT ION TABLE (BY TOPIC)Topics Brief Questions E xercises Exercises 1 1, 2, 3 Problems 1 Concepts for Analysis 1, 2, 3, 4, 5, 7, 8, 9* 1. Realization and 1, 2, 3, 4, recognition; sales 5, 6, 22 t ransac
UT Dallas - AIM - 6330
CHAPTER 19Accounting for Income TaxesASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics Questions Brief Exercises 1 Exercises Problems Concepts for Analysis1. Reconcile pretax financial income 1, 13 with taxable income. 2. Identify temporary and permane
UT Dallas - AIM - 6330
CHAPTER 20Accounting for Pensions and Postretirement BenefitsASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Basic definitions and concepts related to pension plans. Worksheet preparation. Income statement recognition, computation of pension expens
UT Dallas - AIM - 6330
CHAPTER 21Accounting for LeasesASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics *1. *2. Rationale for leasing. Lessees; classification of leases; accounting by lessees. Disclosure of leases. Lessors; classification of leases; accounting by lessors. Res
UT Dallas - AIM - 6330
CHAPTER 22Accounting Changes and Error AnalysisASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Differences between change in principle, change in estimate, change in entity, errors. Accounting changes: a. b. Comprehensive. Changes in estimate, chan
UT Dallas - AIM - 6330
CHAPTER 23Statement of Cash FlowsASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)Topics 1. Format, objectives purpose, and source of statement. 2. Classifying investing, financing, and operating activities. 3. Direct vs. indirect methods of preparing operati
University of Illinois, Urbana Champaign - FIN - 512
Appendix B:Continuous CompoundingQuestion B.1Using a continuous rate of return, we have 67032 er 5 = 100000. This implies er 5 = 1.4918248. Solving, we have r 5 = ln(1.4918248) = 0.40, hence the continuous return is r = 0.40 / 5 = 8%.Question B.2The
University of Illinois, Urbana Champaign - FIN - 512
Online Instructors Solutions Manualto accompanyFundamentals of Derivatives MarketsFirst EditionRobert L. McDonaldNorthwestern UniversityPrepared by Mark CassanoCopyright 2009, Pearson Prentice Hall. All Rights Reserved.Executive Editor: Donna Batt
University of Illinois, Urbana Champaign - FIN - 512
Chapter 1Introduction to DerivativesQuestion 1.1We will look at the CME1. The CME trades derivatives (specifically futures and options on futures) on a wide variety of assets and indices/variables. Assets include basic commodities such as Cattle, Hogs
University of Illinois, Urbana Champaign - FIN - 512
Chapter 2An Introduction to Forwards and OptionsQuestion 2.1The payoff diagram of the stock is just a graph of the stock price as a function of the stock price:In order to obtain the profit diagram at expiration, we have to incorporate the initial cos
University of Illinois, Urbana Champaign - FIN - 512
Chapter 3Insurance, Collars, and Other StrategiesQuestion 3.1This question is a direct application of put-call parity (Equation 3.1) of the textbook. Mimicking Table 3.1, we have: S&amp;R Index 900.00 950.00 1000.00 1050.00 1100.00 1150.00 1200.00 S&amp;R Put
University of Illinois, Urbana Champaign - FIN - 512
Chapter 4Introduction to Risk ManagementQuestion 4.1The following table summarizes the unhedged and hedged profit calculations: Copper price in one year \$0.80 \$0.90 \$1.00 \$1.10 \$1.20 Total cost \$0.90 \$0.90 \$0.90 \$0.90 \$0.90 Unhedged profit \$0.10 0 \$0.1
University of Illinois, Urbana Champaign - FIN - 512
Chapter 5Financial Forwards and FuturesQuestion 5.1Four different ways to sell a share of stock that has a price S0 at time 0. Get Paid at Time 0 T 0 T Lose Ownership of Security at Time 0 0 T TDescription Outright Sale Security Sale and Loan Sale Sho
University of Illinois, Urbana Champaign - FIN - 512
Chapter 6The Wide World of Futures ContractsQuestion 6.1The current exchange rate is 0.02 /, which implies 50/ . The euro continuously compounded interest rate is 0.04, the yen continuously compounded interest rate is 0.01. Time to expiration is 0.5 ye
University of Illinois, Urbana Champaign - FIN - 512
Chapter 7Interest Rate Forwards and FuturesQuestion 7.1We can use (7.1) and solve for the effective annual yield as follows:P (0, n) = 1 [1+r (0, n)]n1/ n [1 + r (0, n)]n = P (0, n)1 r (0, n) = P (0, n) 1We can determine the continuous rate for ma
University of Illinois, Urbana Champaign - FIN - 512
Chapter 8SwapsQuestion 8.1We first solve for the present value of the cost per two barrels:\$22 \$23 + = 41.033. 1.06 (1.065)2We then obtain the swap price per barrel by solving:x+ x = 41.033 1.06 (1.065)2 x = 22.483,which was to be shown.Question 8
University of Illinois, Urbana Champaign - FIN - 512
Chapter 9Parity and Other Option RelationshipsQuestion 9.1This problem is an application of put-call-parity for a stock with a continuous dividend. We have:P (35, 0.5) = C (35, 0.5) e T S0 + e rT 35 0.06 0.5 0.04 0.5 P (35, 0.5) = \$2.27 e 32 + e 35 =
University of Illinois, Urbana Champaign - FIN - 512
Chapter 10Binomial Option PricingQuestion 10.11.25 Since Cu = 25 and Cd = 0 we have = 50 = 0.50. To solve the bond amount, one could use Equation (10.2); however, once we know the options , finding the replicating bond position is a simple algebra exe
University of Illinois, Urbana Champaign - FIN - 512
Chapter 11The Black-Scholes FormulaQuestion 11.1You can use the NORMSDIST function of Microsoft Excel to calculate the values for N ( d1 ) and N (d2 ). NORMSDIST(z) returns the standard normal cumulative distribution evaluated at z. Here are the interm
University of Illinois, Urbana Champaign - FIN - 512
Chapter 12Financial Engineering and Security DesignQuestion 12.1Let R = e.06. The present value of the dividends isR 1 + (1.50) R 2 + 2 R 3 + (2.50) R 4 + 3 R 5 = 8.1317.The note originally sells for 100 8.1317 = 91.868. With the 50 cent permanent in
University of Illinois, Urbana Champaign - FIN - 512
Chapter 13Corporate ApplicationsQuestion 13.1One could first value equity (E) as a call option and value the debt by subtracting equity from the asset value (i.e., B = A E). We chose the insurance approach. We start with valuing default-free debt which
University of Illinois, Urbana Champaign - FIN - 512
Chapter 14Real OptionsQuestion 14.1Note that, in order to get the answers exact, the up and down factors are u = e0.30 and d = 1/u. The discount rate for the cash flows (which we use with real-world probabilities) is 0.07 + 2 (0.11 0.07) = 15%. The pre
Phoenix - HIST - 135
Liberal Reform OrganizerPresidents John F. Kennedy and Lyndon B. Johnson both sought to fight poverty and racial inequality. The legislation that Kennedy proposed was called the New Frontier and that which Johnson proposed was called the Great Society. E
DeVry Arlington - MBA - 553
1Chapter 1 Introduction to Federal Taxation and Understanding the Federal Tax LawSUMMARY OF CHAPTERThis chapter presents information on the magnitude of federal taxes collected and on taxpayer obligations. Also, the history of U.S. federal taxation is
DeVry Arlington - MBA - AC553
9Chapter 2 Tax Research, Practice, and ProcedureSUMMARY OF CHAPTERTax practice involves the preparation of tax returns and representation of clients before the audit or appellate divisions of the Internal Revenue Service. To become a competent professi
DeVry Arlington - MBA - AC553
31Chapter 3 Individual TaxationAn OverviewSUMMARY OF CHAPTERA basic understanding of the method used to calculate the tax liability is a necessity in the study of federal income taxation. The basic tax formula for individuals is as follows: Gross Incom
DeVry Arlington - MBA - AC553
47Chapter 4 Gross IncomeSUMMARY OF CHAPTERGross income, according to the Internal Revenue Code, includes all income unless specically exempted by law. This comprehensive denition requires a more probing discussion of what must be included in income. Tw
DeVry Arlington - MBA - AC553
61Chapter 5 Gross IncomeExclusionsSUMMARY OF CHAPTERHaving just completed the study of gross income in the preceding chapter and thus gained a comprehension of what income is and when it is taxable, the student should now be ready to proceed to the con
DeVry Arlington - MBA - AC553
77Chapter 6 Deductions: General Concepts and Trade or Business DeductionsSUMMARY OF CHAPTERTax deductions are allowed to taxpayers only if specically authorized by the Internal Revenue Code. Deductions allowable to individual taxpayers fall into four c
DeVry Arlington - MBA - AC553
105Chapter 7 Deductions: Business/Investment Losses and Passive Activity LossesSUMMARY OF CHAPTERDeductions are allowed for losses from unprotable investment-related activities, dispositions of certain assets, and unprotable business operations. Genera
DeVry Arlington - MBA - AC553
123Chapter 8 Deductions: Itemized DeductionsSUMMARY OF CHAPTERPersonal expenses deductible from adjusted gross income are referred to as itemized deductions and are deductible on Schedule A of Form 1040. No deduction is allowed unless the Code specical
DeVry Arlington - MBA - AC553
139Chapter 9 Tax Credits, Prepayments, and Special MethodsSUMMARY OF CHAPTERThe various types of tax credits available to taxpayers are discussed in this chapter. The student should be able to determine which credits represent a reduction of the income
DeVry Arlington - MBA - AC553
153Chapter 10 Property Transactions: Determination of Basis and Gains and LossesSUMMARY OF CHAPTERChapter 10 is concerned with the realization and recognition of gain or loss and with the determination of basis under varying circumstances including: an
DeVry Arlington - MBA - AC553
169Chapter 11 Property Transactions: Nonrecognition of Gains and LossesSUMMARY OF CHAPTERThis chapter deals with situations where there may be nonrecognition of gain or loss. Sometimes the gain or loss may be permanently excluded, meaning that the gain
DeVry Arlington - MBA - AC553
193Chapter 12 Property Transactions: Treatment of Capital and Section 1231 AssetsSUMMARY OF CHAPTERThis chapter focuses on transactions involving capital gains and losses that are subject to special rules and limitations. The chapter also contains the
DeVry Arlington - MBA - AC553
215Chapter 13 Tax AccountingSUMMARY OF CHAPTERAn understanding of tax accounting concepts is vital to any taxpayer, whether the taxpayer is an individual, a partnership, a corporation, or a trust or estate. Many of the concepts are familiar from nancia
DeVry Arlington - MBA - AC553
235Chapter 14 Taxation of Corporations: Basic ConceptsSUMMARY OF CHAPTERCorporation taxation is divided into six areas. They are (1) formation, (2) operation, (3) distributions, (4) redemptions, (5) liquidations, and (6) reorganizations. This chapter f
DeVry Arlington - MBA - AC553
263Chapter 15 Corporate Nonliquidating DistributionsSUMMARY OF CHAPTERThis chapter focuses on corporate nonliquidating distributions. The tax status of these distributions determines whether the shareholders and/or the corporation have income, as well
DeVry Arlington - MBA - AC553
285Chapter 16 Corporate Distributions in Complete LiquidationsSUMMARY OF CHAPTERChapter 15 discussed ordinary corporate distributions, including distributions of property and stock, as well as stock redemptions and partial liquidations. This chapter di
DeVry Arlington - MBA - AC553
301Chapter 17 Corporate ReorganizationsSUMMARY OF CHAPTERThis is the capstone chapter in corporate taxation. Students must understand corporate formations (Code Sec. 351), distributions and redemptions (Code Secs. 301-304, 311, 316), and liquidations (
DeVry Arlington - MBA - AC553
317Chapter 18 Accumulated Earnings and Personal Holding Company TaxesSUMMARY OF CHAPTERBoth the accumulated earnings tax and the personal holding company tax serve the same broad objective: to encourage dividend distributions and enforce double taxatio
DeVry Arlington - MBA - AC553
329Chapter 19 PartnershipsFormation and OperationSUMMARY OF CHAPTERThe partnership form is probably the most common type of business organization involving more than one owner. The term partnership is not conned to a partnership as dened under local la
DeVry Arlington - MBA - AC553
351Chapter 20 PartnershipsDistributions, Sales, and ExchangesSUMMARY OF CHAPTERPartnership distributions are generally nontaxable to both the partnership and the partner. The partner normally takes a carryover basis in distributed property and recognit