ACCT 3120 INTERMEDIATE ACCOUNTING - II FALL 2008 Dr. K. K. Raman Office: BUSI 202D Office Hours: T: 11:00-12:15; W: 5:40-6:15 (Also by email or appointment) Phone: 940.565.3089 (When leaving a message, please speak SLOWLY and CLEARLY.) Fax: 940.565.3803 E-mail: Raman@unt.edu. (Be sure to state “ACCT3120” upfront in the subject line.) Please do NOT send email to my WebCT address.) 1. Course Objectives: Intermediate Accounting II is part of the course sequence in financial reporting and is a continuation of ACCT 3110 (Intermediate-I). The specific objective of the course is to provide theoretical and technical grounding in the financial accounting treatment of investments in equity securities, debt securities, leases, pensions and other post-retirement benefits, income taxes, stockholders equity, accounting changes and errors, employee stock options, earnings per share, and cash flows. Essentially, this is a heavy-duty technical course which most students find challenging. The course will be taught as a combination of lecture, problem solving, and discussion. Students who plan a career in accounting or financial analysis will find many of the topics in Intermediate Accounting-II essential to their professional preparation. Most of the topics covered in the course are also included from time to time in the Uniform CPA Examination and the Certificate in Management Accounting (CMA) Examination. Intermediate Accounting-II also is useful to those (such as finance majors) who wish to develop depth in the discipline of accounting without pursuing accounting as a career. Be sure to read the last page “Suggestions for Succeeding in this Course” for helpful suggestions for doing well in this course. 2. Course Prerequisites: ACCT 2010, 2020, 3110 (Intermediate I) with grades of C or better; ECON 1100, 1110; MATH 1100 or 1190; BCIS 2610. 3. Text Materials: Intermediate Accounting by Spiceland, Sepe, and Tomassini (SST), 4th Edition, 2007. A simple 4-function calculator, i.e., a calculator that can handle only addition, subtraction, multiplication, and division. To avoid being penalized, you may use only such a calculator on quizzes and tests. If you do not have your own, you must use the one provided by the Department (which you may or may not like). Cell phones may NOT be used as calculators during exams or exam review periods. Handouts (H/O): -- A set of practice test questions and exercises will be provided. 2 4. About financial accounting: In the US (and similar economies), capital markets play an important role in channeling financial resources from savers to firms that need capital. The role of financial accounting is to help market forces channel resources to the better performing firms, i.e., translate a firm’s many activities into numbers that allow external observers (such as investors and creditors) to assess performance. Given the information asymmetry between firms’ managers and external investors, firms that provide more credible information may be expected to trade at higher valuations in the capital markets, i.e., have a lower cost of capital. Overall, financial reporting is an interesting and important responsibility for both managers and auditors, and has both an information role as well as a contracting role. Information Role: Accrual accounting attempts to capture the future cash flow consequences of current period transactions and events. The accounting discretion (assumptions and estimates) inherent in the accrual process permits managers to communicate their private information about the firm’s future cash flows to outside investors. Thus, analysts= forecasts are typically expressed in terms of expected earnings rather than dividends or cash flows. The downside is that accounting discretion may be used by managers to report opportunistically, i.e., manage (manipulate) reported earnings to meet or beat earnings expectations (for example). Contracting Role: “Generally accepted accounting rules are an integral part of how corporations transact. Examples: (1) Loan agreements restrict a borrower’s ratio of debt to assets and one requires rules B acceptable to both borrower and lender B for measuring debts and assets; (2) Firms raise large amounts of capital in public markets and one requires rules B acceptable to both managers and shareholders B that govern the amount and type of information to be publicly disclosed to allow investors to monitor the performance of these firms; (3) To compensate managers on the basis of profits, one requires rules B acceptable to managers, shareholders, and compensation committees B for measuring profits.” The common thread in these examples is that accounting information is used in a variety of corporate transactions, and acceptable rules of accounting are necessary for the transactions to proceed. Change the accounting rules and you change how corporations behave. Further, accounting rules require continual maintenance and cannot be laid down once and for all time. For example, the emergence of long-term non- cancelable leases rendered less effective the protection afforded to lenders by balance sheet debt-ratio covenants. To restore the usefulness of the balance sheet, the FASB implemented new rules to capitalize leases that are financing transactions. As a consequence, one could lend to a corporation with greater assurance than its leverage was effectively constrained by agreement. Similarly, better accounting rules for derivatives would mean that investors and lenders could transact with greater assurance about the extent and nature of a corporation=s risk exposure. The development of accounting standards is influenced by objectives (usefulness for decision making) as well as by the political process. Assessing the usefulness (relevance) of an accounting method also requires an assessment of its effects on managerial behavior, i.e., an assessment of managers’ abilities to use that method to report opportunistically. Note also that although there may be many different answers to accounting problems (i.e., how do we record the transaction so as to properly convey to investors its economic impact and/or future cash flow consequences?), standards control the way in which these problems are resolved. These standards (GAAP) are important in providing comparable and predictable financial reporting, and in the development of capital markets and in building investor confidence. 3 5. Grading: Your course grade will be determined by your performance on the Exams, Quizzes, the Practice Test Questions, and the Case. Your grade will be determined as follows: Exams (2 @ 100 points) = 200 Final Exam (Comprehensive) = 150 Quizzes* = 20 Practice tests (I and II only) = 5 Case** = 20 Total Points 395 All scheduled/due dates are listed on page 7 (Section 12) below. *There may be a total of 7 pop (surprise) Quizzes (worth 4 points each), but only your top 5 quiz scores will be included in computing your grade (i.e., you get to drop/miss two quizzes). These quizzes will generally be given at the end of class and will cover material from the chapter discussed during that class period. If you are not in class at the time the quiz begins, a zero will be recorded for that quiz. There will be no make-ups for quizzes missed. ** Case is a team project. Each team (consisting of no less than 3 and no more than 4 students per team) submits a team report. 6. Class Preparation and Homework: You should examine the chapter outline, read each chapter, and attempt to work the assigned exercises before the class lecture. Attempting the assigned work in advance will make the class a more meaningful learning experience. By working homework before class, you become familiar with the assigned problems and exercises and thus able to follow the instructor as he demonstrates solutions. You will also know specifically what you do not understand about the problems, and as the instructor presents and analyzes his solutions, you will gain insight and learn. To struggle with problems before the instructor has covered the related material is learning to learn on your own, which is a critically important skill for the workplace. Getting a homework problem right in a textbook sense is far less important than coming to understand what you do not grasp so that you maximize the benefit of classroom time. There is simply not enough time to do all the assigned problems in class; therefore, you should attempt the assigned problems on your own. Solution manuals are available in the accounting lab (CURY 311) and the Willis library reserve desk. The tutors in the Accounting Lab may be able to help you if you have specific questions regarding homework or wish to check homework solutions. You can also access the solution manual from any computer in COBA: P:\DATAFILE\ACCT3120\SPICELAND4E. No password is required. Research has shown that students perform better and learn more when they work in groups. You are encouraged to study together in groups. You will also enjoy the class more if you make acquaintances in class. It is a good idea to obtain the phone numbers of one or two students in class, so that if you miss class you can call them to find out what you missed. 4 7. Exams and Quizzes: Examinations (except for the final examination) will be returned and reviewed in class. The instructor will then collect the exams and keep them on file in his office. If questions arise later regarding grades, all exam papers will be available for your review. Note: You will receive a failing grade (F) in the course if, for any reason, you fail/forget to return the test at the end of the review. While reviewing an exam, you may write on the exam itself; however, you may not take any other notes. Doing so will be treated as academic dishonesty and you will receive an F in the course. All cell phones and pagers should be turned off and stored during class, exams, and exam review periods. Students are also expected to report any suspected cheating; failure to do so is considered equivalent to cheating. No makeup examinations will be given during the semester. A missed exam will count as a zero (0), unless in the opinion of the instructor the reason for missing the exam resulted from a critical set of circumstances beyond the student's control. Most likely very few reasons will be considered critical! If you missed an exam with an excused absence, your grade on the final exam will serve as the grade on the missed exam. All examination absences must be documented in writing. If at all possible, you must notify the professor before the exam about your absence. 8. Practice Test Handouts: Questions on the exams may be similar to the Practice Test questions that are included in the handouts Practice I, II, and III. Completed original practice tests should be submitted at the beginning of class on the day of the review. You do not need to show work on the practice tests, just your handwritten answers. Please do not submit separate scratch sheets. Retain a photocopy of the practice tests for your use since you may need to review the questions during class or prior to the exam. There will be no make-ups for practice tests not submitted on time. To receive credit, (1) you MUST submit the ORIGINAL Practice handout (Practice I, II) with your final answer written in (please do NOT submit any scratch sheets), and (2) your submission must be stapled. Do not submit Practice III. 5 9. Case The Case (see page 7, section 12 below for title/due date) is a team assignment. The case will be graded based on your analysis, discussion, and citation of authoritative literature (where appropriate), and not necessarily on whether you have the right or wrong answer. Each team should hand in a short and tightly-written (no more than 3 pages, typed double-spaced) paper (plus an Appendix as necessary). The paper should be well written and will be graded for both content and form. Essay questions must be answered in complete sentences; bullet point answers are not acceptable. Cases are due at the beginning of class on the date they are due. There will be no make-ups for cases not submitted on time. Be sure to refer to FARS, if you need to refer to authoritative literature. As you read the Case, please remember that “Frustration stemming from incomplete information is a real- world phenomenon that students will face repeatedly in their professional careers. In fact, learning to accept or cope with such frustration can be a beneficial outcome of using real-world cases in accounting.” Students should avoid becoming impatient with the lack of a single definite solution. Begin your write-up by directly answering the Question(s) in the case, i.e. do not write an introductory essay (2 points). Then, move on to your analysis, support, etc. in a separate paragraph as part of the same answer. More detailed information can be provided in an Appendix. Note that you will lose 1 point for each spelling error, typo, incomplete sentence, etc. Hence, please proofread and edit your paper carefully before you submit. Do NOT repeat the questions in your paper. Use the Times New Roman 12 point font with standard 1-inch margins. The key to earning a good grade on this assignment is to directly answer the question(s) in the case, cite authoritative literature (FARS, not the textbook) where appropriate, and write well, i.e., be clear in your own mind as to what it is that you want to say and express those ideas clearly in short and simple sentences. Please type double-spaced (2 points). The answer to each question should be in a separate paragraph (5 points). Also, the answer to each question should be numbered up-front (e.g., 1,2,3, etc.). Amounts should identify the unit of measurement (e.g., $) and have commas as appropriate, e.g., $123,456,789 (2 points). To receive credit, you must (1) directly answer the assigned Questions and provide support for your answer, and (2) write well. Also, the entire submission (including the Appendix, if any) must be stapled. E-mail and fax submissions are NOT acceptable and will not be graded. Be sure to number the pages of your report. 10. Attendance (and late arrival): Because of the complexity of the material, it is essential that you attend class. If you are late to class for reasons beyond your control, please join the class as soon as possible. Also, if you are late to class, please take a seat in the back of the room to minimize the distraction to other students. Habitual tardiness, however, is unprofessional. If you cannot regularly arrive on time, please drop the course. Our course schedule does not permit time for redoing a topic once discussed. Office hours are not meant for repeating lectures to non-attendees. It is the student=s responsibility to find out if there are changes in assignments. Please obtain the phone numbers or e-mail addresses of two students in class, so that if you miss class for any reason you can call/e-mail them to find out what you missed. 6 11. Important Information: a. Exams will be based on topics covered in class. The PowerPoint-type chapter outlines identify the topics to be discussed in class. b. Please comply with all the instructions in the syllabus for the various submissions (practice tests, etc.). Do NOT slip assignments under my office door: they will end up in the trash and receive no credit. You can leave the assignments in my mailbox in the Accounting Department (COBA 215). My mailbox in COBA 215 is above my name. c. Grades should be posted on WebCT by the end of the week after each exam. Tests will be returned for review the last 45 minutes of the class period following the exam. Two bonus points will be added to the test scores of students who are present for the entire class period on such days and are also on my seating chart. There will be no exceptions to the rule that you have to be present the entire class period to obtain the 2 bonus points. These bonus points may NOT be made up even for excused absences. d. While reviewing a test, you may write on the test itself. However, you may NOT take any other notes; doing so will be treated as academic dishonesty. All books, notes, cell phones and pagers should be stored and placed on the floor during tests and test-review periods. Opening or using cell phones during tests and test-review periods will be treated as cheating. Students are also expected to report any suspected cheating; failure to do so is considered equivalent to cheating. e. All assignments are due at the beginning of class, and cannot be made up even for excused absences. If you are unable to come to class for any reason, you may mail-in (or fax-in) the Practice Test assignment to the instructor: Dr. Raman, UNT Accounting/Business, P.O. Box 305219, Denton, TX 76203; Fax 940.565.3803. You will receive credit if the envelope is postmarked by the due date. To receive credit, faxes must be received before the beginning of class. Deadlines will not be extended; you can always submit early. Only the Practice Test assignment may be faxed (or mailed) in. f. For information relating to UNT closings due to bad weather, call the UNT Police Department at 940- 565-3000 or check the unt.edu website. g. All cell phones and pagers should be turned off and stored during class, exams, and exam-review periods. h. On Quizzes and Exams, the scantron score is final. Hence, it is your responsibility to remember to use a No. 2 pencil and also to completely fill-in the box on the scantron. i. A lot of what we call a “college education” basically consists of learning how to learn, i.e., how to concentrate for progressively longer times, how to postpone gratification, how to teach yourself. Most of what you will learn in later life, you will teach yourself. 7 12. Important dates to remember: Note: Deadlines will NOT be extended; you can always submit early. Sept. 16 - Q&A session. Practice I due. Sept. 18 - Exam 1. Oct. 3 - Last day to drop without being subject to a grade of WF. Signed drop slips may be picked up from the Receptionist in the Accounting Dept. (COBA 215) between 8 am and 5 pm weekdays. NOTE: AFTER TODAY, A STUDENT WHO HAS NOT ATTAINED A 60% (OR BETTER) AVERAGE WILL RECEIVE A “WF” (which has the same effect as an F for GPA purposes). Oct. 21 - Q&A session. Practice II due. Oct. 23 - Exam II. Oct. 28 - Last day to drop. Nov 11 & 13 - Work on Case Project. Nov 25 - Case “Accelerating Corporate Performance: Stock Buybacks with Zip” due today. Submit a write-up for the Requirements specified at the end of the Case. This Case was handed out the first day of class along with this syllabus, and is a team project. Each team (consisting of no less than 3 and no more than 4 students per team) submits a team report. Individual submissions (or submissions from teams with less than 3 or more than 4 members) will not be graded. Each team is required to work independently, and all members of the team must work on each Question. Also, be sure to see section 9 above for other instructions. NOTE: FARS (the Financial Accounting Research System) can be accessed in the Accounting lab in CURY 311 and in the COBA computer labs. Up to twelve students may access FARS in the labs simultaneously. Instructions for using FARS are on the CD that you access in the lab. You can also access FARS at home (via the internet) by subscribing to FARS at www.wiley.com/college/farsonline. Dec. 10 - Tuesday. Final Exam 8:00-10:00am. 13. List of Handouts: (Pl. check to make sure that you have all the pages in your handouts. I plan to post these on WebCT.) A. First Day of Class B. First Class Period After Exam I C. First Class Period After Exam II 1. This syllabus + Suggestions 1. Chapter Outline 1. Chapter outline 2. Chapter outline 2. Practice II 2. Practice III 3. Practice I 3. Practice II solutions 3. Practice III solutions 4. Practice I solutions 4. Exercises- II w/ solutions 4. Exercises-III w/ solutions 5. Exercises-I w/ solutions 5. Revised Pensions Chp. 17. 6. Case 8 14. STATEMENT ON CLASSROOM BEHAVIOR Civility in the classroom is a prerequisite for a good learning environment. The instructor and the students must respect each other and demonstrate that respect. Students must also respect one another and recognize that a disruptive environment interferes with the learning process. To assure a civil learning environment, students must observe certain rules. These rules include: 1. Turn off all cell phones, pagers, and other electronic devices before class begins. 2. Stay in their seats during the entire class. 3. Refrain from talking with other students during class. 4. Refrain from using all tobacco products in the classroom. 5. Refrain from consuming food while class is in progress. 6. Refrain from any other distracting behavior such as reading newspapers or sleeping. The instructor is similarly bound to be on time, to be respectful of student opinions, and to create the best learning environment possible. 15. ACADEMIC DISHONESTY The UNT Code of Student Conduct and Discipline provides penalties for misconduct by students, including academic dishonesty. Academic dishonesty includes cheating and plagiarism. The term "cheating" includes, but is not limited to, (1) use of any unauthorized assistance in taking quizzes, tests or examinations; (2) dependence upon the aid of sources beyond those authorized by the instructor in writing papers, preparing reports, solving problems, or carrying out other assignments; or (3) the acquisition, without permission, of tests or other academic material belonging to a faculty member or staff of the university. The term "plagiarism" includes, but is not limited to, the use, by paraphrase or direct quotation, of the published or unpublished work of another person without full and clear acknowledgment. It also includes the unacknowledged use of materials prepared by another person or agency engaged in the selling of term papers or other academic materials. (Source: Code of Conduct and Discipline at the University of North Texas.) Penalties: If you engage in academic dishonesty related to this class, you will receive a failing grade on the test or assignment, and a failing grade in the course. In addition, the case will be referred to the Dean of Students for appropriate disciplinary action at the University level. Students are also expected to report any suspected cheating; failure to do so is considered equivalent to cheating. 16. AMERICANS WITH DISABILITIES ACT The Department of Accounting, in cooperation with the Office of Disability Accommodations, complies with the Americans with Disabilities Act in making reasonable accommodations for qualified students with disabilities. If you have an established disability as defined in the Americans with disabilities Act and would like to request accommodations, please present your written accommodation request by the end of the second week of classes. 9 ASSIGNMENT SHEET # of class Chapter hours Topic Number Assignments* Review Ch. 1 (Environment and Theoretical Structure of Financial Accounting). 4.5 Investments in Equity 12 H/O Ex** 1,2,3,4,5; Securities SST*** E 6, 8, 12, 13, 17, 18, 19. 1 Concepts of Present and 6 Future Value 5 Debt Securities (Bonds) 14 H/O Ex. 6,7,8,9,10,11; SST E14(1), 14; P3, P4. 1.5 EXAMINATION I 1.5 Debt Securities (Conv. Bonds, Warrants, and Notes) 14 (contd.) H/O Ex. 12,13,14,15,16,17, 19. 4.5 Leases 15 H/O Ex. 1,2,3,4; SST E3,20. 3 Pensions and Other Post- 17 (Revised)**** H/O Ex. 5; SST BE11, 12, 13; E1, Retirement Benefits 5, 8, 9, 10, 12, 14, 15, 17, 19. 3 Income Taxes 16 H/O Ex. 1,2,3,4,5,6; SST E4,5,7, 9, 13. 1.5 EXAMINATION II 1.5 Income Taxes (Contd.) SST : E 1, 2, 3. Questions on exam about Derivatives, SST: pp. 1129- Appendix A derivatives will be entirely conceptual. 1142 only.**** 1.5 Accounting Changes 20 H/O Ex. 1,2; SST E1, 2, 8, 9, 13, 21. 3 Stockholders Equity 18 H/O Ex. 1,2,3,4; SST E13. 3 Stock Options/Earnings Per 19 SST E1,7,14,15. Share 3 Statement of Cash Flows 21 H/O Ex. 1,2,3,4,5; SST E29, P1. FINAL EXAM (Comprehensive) *Assignments are tentative and subject to change; changes will be announced in class. **H/O Ex refers to the Exercise handouts. ***SST refers to Spiceland, Sepe, and Tomassini (the textbook). ****Revised Chp. 17 (based on SFAS 158) will be provided as a class Handout (also on WebCT). P. 1142: E 1: Questions 8 and 11: Read “investment” instead of “stock investment.” 10 ACCT3120 Dr. Raman How to obtain your grades from WebCT A. To get your Student Login ID (Username) and Password: 1. Open either Internet Explorer or Netscape web browser and go to the web page http://www.coba.unt.edu/ 2. Click on COBA WebCT. 3. At the BOTTOM of the web page, click on the option “Student Guide to WebCT.” 4. Click on the option “ID and Password Information.” 5. The Username for WebCT is your EUID (Enterprise User ID). To get your EUID, Click on “this form.” 6. Enter your Student Identification Number (usually your social security number) and Birth data as shown on the screen. 7. Click SUBMIT QUERY 8. The system will come back to you with your EUID (Username). 9. Your initial password is your UNT Student ID number. B. To check your test scores or end-of-semester course grade: 1. Open either Internet Explorer or Netscape web browser and go to the web page http://webct.unt.edu/ (NOTE: This is not the COBA website.) 2. Click on “Log on to my WebCT.” 3. You will get a dialog box asking for Username (your EUID) and Password. Enter the information (in lower case) and click “ok.” 4. Click on “ACCT 3120: Intermediate Accounting II.” 5. Click on the “Grades” icon to check your test scores and grade. NOTE: WebCT should be used to check grades only. Please do NOT use WebCT for e-mail. If you have problems logging on to WebCT, contact the Computing IT Center Help Desk at 940.565.2324 (ISB 119). We reserve the right to correct any clerical errors on WebCT.
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