Accy 510 Polinski class diary - Accy 510 Polinski class...

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Accy 510 Polinski class diary Day 1: (a) Introduction to class; (b) taking your questions on class; and (c) first exercise. (a) Consistent with 500-level courses, the objective is to build skills as much as or more than to build knowledge. We want to prepare you to be professionals sophisticated in financial reporting over the long run. We also take into account the Boards’ trends towards making standards more qualitative and unstructured (what most people consider ‘principles-based’) than quantitative and structured (‘rules-based’). Start each topic this semester developing an understanding the economic and business impacts of transactions and events on firms. Once we’ve got a full understanding of these, we’ll consider how we should apply the fundamental financial reporting principles to existing and potential reporting treatments to generate useful information for stakeholders. (b) Most all student questions about the syllabus and class dealt with requirements and grading. Assignments and grading will reflect: - Your understanding of the core financial reporting concepts and how to apply them to the various topics we cover; - Increasing levels of difficulty from [homework to quizzes to exams] as you become more familiar and comfortable with class topics and methods; and - Your clear documentation of your thinking and judgment processes because the process is more important than the final ‘bottom line’ answer (journal entry, financial statement excerpt). We give you a lot of homework not only to help us and you to assess your learning but also so that you see what types of issues we stress and questions we like to ask. (c) First in-class exercise: analysis of a simple financial instrument (plain-vanilla bond). Before we even think about the accounting and reporting aspects, we first want you to fully understand the ways the transaction/event impacts the transactors, from first impact to last over time. Then you can fit the accounting and financial reporting treatment to the full set of impacts. Most all financial reporting standards cover the entire life cycle of a transaction or event, from the viewpoint of each transactor. We asked you to analyze the bond transaction using a time line - a straightforward tool to help you organize the effects on the firm. We covered exercises 1.1 and 1.2 briefly, to be continued in class period 2. We considered the time line for 1.1 as capturing the events from the contract that also represent economic reality: the cash interest payments represent the entire return the bond investor earns over the bond term because the cash interest rate and effective (market) interest rate are the same; all return is paid through periodic cash payments, and the face value payment on 1/31/2021 returns the initial investment to the investor.
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We carried forward exercise 1.2's time line to class period 2 (below). Homework assignment: Do the last exercise at the bottom of handout #1.
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This note was uploaded on 02/16/2012 for the course ACCY 510 taught by Professor Staff during the Fall '08 term at University of Illinois, Urbana Champaign.

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Accy 510 Polinski class diary - Accy 510 Polinski class...

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