ACCOUNTING 401 (46) - ADVANCED FINANCIAL ACCOUNTING
SPRING TERM – 2009
COURSE DESCRIPTION: Study of business combinations, and related consolidated financial
statement issues, accounting for foreign operations, and accounting problems of partnerships.
REQUIRED TEXT: Advanced Accounting, Hoyle, Schaefer, & Doupnik, 9th, Irwin McGraw Hill
Publishing Company. ISBN: 978-0-07-337945-6
Having completed Chapter One, students should be able to Identify the sole criterion for applying the equity me-
thod of accounting; Understand the purpose of the 20 to 50 percent guideline as it is to be used by an investor;
Prepare the basic equity method journal entries for an investor; and Understand the appropriate means of record-
ing a change from the market-value method to the equity method and the rationale for this handling.
Having completed Chapter Two, students should be able to Understand the term “business combination”; Diffe-
rentiate between a statutory merger, a statutory consolidation, and a business combination formed when one
company acquires control over another and both remain incorporated; Determine the total cost of the acquisition
and allocate that cost to specific subsidiary accounts, goodwill, or an extraordinary gain; and Using the purchase
method, prepare a worksheet to consolidate the accounts of two companies that form a business combination if
dissolution is not to take place.
Having completed Chapter Three, students should be able to Identify and describe the three basic methods that
an acquiring company can use in accounting for its investment in an acquired company; Discuss the advantages
and disadvantages of each of the three accounting methods that an acquiring company can use in recording its
investment; Determine consolidated balances for any period subsequent to the year in which a purchase com-
bination is formed if the parent uses either the cost method, the equity method, or the partial equity method; and
Realize that amortization must be recognized in connection with the reductions established in a bargain purchase
but this amortization actually decreases expense (thus increasing reported income).
Having completed Chapter Four, students should be able to Understand the meaning of the term "noncontrolling
interest”; Identify three different theories or approaches that can be applied to the valuation of subsidiary accounts when a noncontrolling interest is present; Describe the underlying assumptions of each valuation concept and the
method by which individual subsidiary asset and liability values are established for consolidation purposes under
each of these theories; and Identify and calculate the four noncontrolling interest figures that must be included
within the consolidation process and be able to enter each balance on a consolidation worksheet.
Having completed Chapter Five, students should be able to Understand that intercompany asset transfers often
create accounting effects within the financial records of the individual companies that must be eliminated or ad-
justed prior to production of consolidated financial statements; Eliminate the sales and purchases balances that
are created by the intercompany transfer of inventory (Entry Tl); Compute the amount of unrealized gain included
in the recorded value of any transferred inventory that is still being held by the buyer at the end of a fiscal period;
Prepare the consolidation entry (Entry G) to eliminate any intercompany inventory gain that remains unrealized at
the end of the year of transfer; and Make the consolidation entry (Entry *G) to eliminate unrealized intercompany
gains from beginning retained earnings (or in one specific instance from the Equity in Subsidiary Earnings ac-
count) and from the cost of goods sold for the period following the year of transfer.
Having completed Chapter Six, students should be able to describe a variable interest entity and primary benefi-
ciary. Also should know when a variable interest entity is subject to consolidation; Recognize that intercompany
debt transactions require a constantly changing consolidation entry to be prepared for each subsequent period
until the debt is formally retired; Understand that preferred stocks can resemble either debt or equity issues and
identify the characteristics of each type; Compute basic and diluted earnings per share for a business combina-
tion in which the subsidiary has dilutive convertible securities; and Identify subsidiary stock transactions that can
impact the underlying book value figure recorded within the parent's Investment account.
Having completed Chapter Seven, students should be able to Differentiate between a father-son-grandson own-ership configuration and a connecting affiliation; Prepare a consolidation worksheet for both a father-son-grandson ownership pattern and a connecting affiliation; Eliminate a subsidiary's ownership interest in its parent when either the treasury stock approach or the conventional approach is being applied; When mutual ownership exists, determine realized income figures under the conventional approach for both the parent and the subsidiary by solving two simultaneous equations; and Determine the deferred tax liability that is created when the tax bases of a subsidiary's assets and liabilities are below consolidated values.
Having completed Chapter Twelve, students should be able to fulfill each of the following learning objectives: Un-derstand the essential role that the availability of information plays in stimulating the capital markets in the United States; Describe the responsibilities and objectives of the Securities and Exchange Commission (SEC); Indicate the purposes of Regulation S-K and Regulation S-X; Discuss the methods by which the SEC has applied its au-thority over financial reporting in this country; and Identify the major provisions of the Sarbanes-Oxley Act of 2002; Describe how this legislation is impacting and will continue to impact the public accounting profession in the fu-ture; and Describe the purpose and general content of requiring registration statements.
Having completed Chapter Fourteen, students should be able to fulfill each of the following learning objectives: Describe the purpose of an Articles of Partnership and list specific items that should be included in this agree-ment; Use both the bonus method and the goodwill method to record a capital investment made by a partner who is contributing an attribute such as a specific expertise or an established clientele; Allocate income to partners when interest and/or salary factors are included; Discuss the meaning of a partnership dissolution and under-stand that a dissolution will often have little or no effect on the operations of the partnership business; Prepare journal entries to record the acquisition by a new partner of a current partner's interest. These entries should be made both as a reclassification as well as by means of the goodwill approach; Prepare journal entries to record a new partner's admission by a contribution made directly to the partnership. These entries should be made both by the bonus method as well as by the goodwill method; and Prepare journal entries to record the withdrawal of a current partner.
Having completed Chapter Fifteen students should be able to Discuss the roles played by the accountant in the termination and liquidation of a partnership; Produce journal entries to record the transactions incurred in the li-quidation of a partnership; Prepare a schedule of liquidation; Determine the appropriate distribution of any cash that remains at the end of a liquidation when one or more of the partners has a deficit capital balance; Discuss “marshaling of assets” and explain how this doctrine is applied in distributing the assets of an insolvent partner-
ship; and Prepare a proposed schedule of liquidation to determine an equitable preliminary distribution of availa-ble partnership assets.
PREPARATION: To facilitate your learning process, assigned readings and homework problems
should be completed before each class. Both attendance and class participation are strongly rec-ommended, as they are essential to a successful learning process.
STUDENTS WITH DISABILITIES: If a student with a disability desires an accommodation, it is
the student’s responsibility to identify himself or herself as having a disability and to make a formal request for appropriate accommodations. The Disabilities Service Coordinator at Furman is Ms. Gina Parris at extension 2322.
ACADEMIC DISHONESTY: Academic dishonesty in any form is a fundamental offense against
the entire academic community and is always a threat to the standards of the college and to the standing of every student. In taking tests, examinations, doing homework, laboratory work, and writing papers, students are expected to perform with honor.
One of the most common forms of academic dishonesty is plagiarism. Plagiarism is the use of another’s words or ideas as if they were one’s own. To avoid plagiarism, students should ac-
knowledge their sources, using whatever documentation is appropriate to the discipline in which their work is being done.
GRADING: The course grade will consist of the following items:
Exam 01 – 25%
Exam 02 – 25%
Exam 03 – 25%
Exam 04 – 25%
Make-up tests: Make-up tests are given at the end of the semester. Make-up tests will be similar
to original tests, but not the same test as the original. The student may make up no more than
one test. If the student misses more than one test, those tests will be assigned a grade of zero.
Since make-up tests are considered to be extraordinary, the student must provide a documented
reason for having missed a testing session to be eligible to make up a missed test.
The following grade scale is used:
A = 90 - 100
B = 80 - 89
C = 70 - 79
D = 60 - 69
F = 0 - 59
INSTRUCTOR: Lyle C. Frazer, MBA, ABA
Primary Email: (Mon. – Sat.) firstname.lastname@example.org Backup Email: (Mon.-Sat.) Moodle – Furman Course Management
SCHEDULE OF CLASS MEETINGS AND ASSIGNMENTS: Date Chapter Homework Assignment Jan 15 1 Discussion Questions: 1,3,4,7,10,11,13,14,15.
Jan 22 2 Discussion Questions: 1,3,4,6,8.
Jan 29 Exam 01 – Chapters 1 and 2. Feb 05 3 Discussion Questions: 1,4,6,7,8,11.
Wendy’s Analysis Case.
Feb 12 4 Discussion Questions: 1,2,4,7,8
Problems: 1,3,4,5,7,9,11,13,15,16,17,18,19,20,22. Feb 19 5 Discussion Questions: 1,2,4,10,12.
Problems: 1,2,4,5,7,10,11,12,13,14,15,19. Feb 26 Exam 02 – Chapters 3, 4 and 5. Mar 05 6 Discussion Questions: 1,3,5,14
Problems: 6,7,15,19,22,29,36,46 Provided as a sample Mar 12 Spring Break – No Classes
Mar 19 7 Questions: 1,2,3,5,6,12
Research Case: Consolidated Tax Expense Mar 26 8 Discussion Questions: 2,3,5,7,8,9,10,13,14,18,19,20
Problems: 4,7,810,11,20,21,22 Apr 02 Exam 03 – Chapters 6,7, 8.
Apr 09 12 Discussion Questions: 3,6,7,9,10,11,12,13,17,18,33
Research Case: 1
Analysis Case: 1
Communications Case: 1
Apr 16 14 CH 14
Discussion Questions: 1,3,5,6,7,8,11,13,15
Research Case: 2
Apr 23 15 CH 15
Discussion Questions: 1,4,5,7,8,10,11
Problems: 5,6,8,10,12,13,17,21 (provided as a comprehensive
Apr 30 Exam 04 – Chapters 12, 14, and 15.
Monday, January 19, 2009, is a holiday observed by Furman. It does not affect our schedule.
It is very unlikely these assignments will be modified during the term. Any changes will be an-
nounced in class and distributed via email.
COURSE: ACC 401 (46) SECTION: __A__ SEMESTER: Spring, 2009
I, _____________________________________________, have received and read a copy of the course sylla-
bus (Print your name)
for this course. This syllabus includes the cover sheet, course description, required text(s), learning outcomes,
grading and grading scale, schedule of class meetings and assignments.
Student Initials Date