Is a Reported Goodwill Impairment Loss Really a Goodwill Impairment Loss? A Financial Reporting Case on Evaluating the Efficacy of Authoritative Guidance

2019 ◽  
Vol 34 (3) ◽  
pp. 59-69
Author(s):  
Casey J. McNellis ◽  
Walter R. Teets
Keyword(s):  
Financial Reporting ◽  
Theoretical Perspective ◽  
Financial Accounting ◽  
Accounting Students ◽  
Graduate Level ◽  
Generally Accepted Accounting Principles ◽  
Goodwill Impairment ◽  
Accounting Principles ◽  
Accounting Courses ◽  
Professional Research

ABSTRACT While undergraduate financial reporting courses focus primarily on the application of generally accepted accounting principles and the mechanics of accounting treatments, graduate-level courses should motivate students to explore standard-setting's theoretical perspective and to develop a more rigorous understanding of accounting issues not necessarily discussed in textbooks, but included, implicitly or explicitly, in the authoritative guidance. Anecdotal evidence suggests that accounting students face difficulties transitioning from the undergraduate setting to the higher expectations common in graduate accounting programs and the workplace. This hypothetical case provides an interesting scenario on goodwill impairment to facilitate the development of students' understanding of accounting theory and its connection to professional research skills. While students are accustomed to computing goodwill impairment losses from knowledge acquired in undergraduate financial accounting courses, this topic contains interesting theoretical and practical issues and serves as a salient example of the analysis of interesting accounting issues possible at the graduate level.

Good Intentions at Good Grains, Inc.

2012 ◽  
Vol 28 (1) ◽  
pp. 115-129 ◽  
Author(s):  
Susan B. Hughes ◽  
Cathy Beaudoin ◽  
Russell R. Boedeker
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
External Pressure ◽  
Financial Accounting ◽  
Managerial Accounting ◽  
Ethical Considerations ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards ◽  
Gray Area ◽  
Accounting Principles

ABSTRACT: This case addresses the “gray” area associated with the use of accounting discretion as it relates to expense line item reclassifications. Such a context allows for an examination of the pressures that influence accounting decisions, and provides a glimpse into how managers might manage reported expenses. The reader meets analyst David Johnson when, as a result of both internal and external pressure to keep research and development (R&D) costs within budget, he is asked to find ways to reclassify R&D costs into other expense areas. As a result of the request, David immerses himself in the task in order to identify, within generally accepted accounting principles (GAAP), opportunities to reclassify R&D expenses to cost of goods sold. He ultimately proposes three separate reclassification entries that, although technically within GAAP guidelines, involve the use of accounting discretion. All three entries are approved by the accounting team. Financial accounting, managerial accounting, and M.B.A. students report that the case enhanced their knowledge of financial reporting and helped them understand ethical considerations associated with the preparation of financial statements. Accounting professionals report the case realistically depicts what accountants face in the workplace. A case extension using International Financial Reporting Standards (IFRS) is also provided.

How Adjusting Entries Affect the Quality of Financial Reporting: The Case of Frosty Co.

2012 ◽  
Vol 27 (2) ◽  
pp. 493-524 ◽  
Author(s):  
Jason C. Porter
Keyword(s):  
Financial Reporting ◽  
Stock Price ◽  
Financial Statements ◽  
Thinking Skills ◽  
Critical Thinking Skills ◽  
Financial Accounting ◽  
Accounting Students ◽  
Financial Position ◽  
Accounting Scandals ◽  
Accounting Courses

ABSTRACT Recent accounting scandals have emphasized the need to think beyond debits and credits. Accounting students must understand the effects of transactions on a company's financial position, as well as the pressures and incentives they will someday face to misrepresent that position. This case introduces students in intermediate financial accounting courses to both of these important objectives. First, the case improves students' critical thinking skills in accounting by allowing them to determine if various correcting entries should be made, and what the effects of those transactions will be on the company's financial statements. Second, the case improves students' ability to evaluate ethical consequences by introducing them to conflicting incentives regarding those corrections: the obligation to provide investors with high-quality financial statements that fairly present the company's financial position versus the pressure to maintain a high stock price for investors. The case may be completed using either U.S. GAAP or IFRS.

Alibaba Group Initial Public Offering: A Case Study of Financial Reporting Issues

2016 ◽  
Vol 31 (4) ◽  
pp. 449-460 ◽  
Author(s):  
Qing L. Burke ◽  
Tim V. Eaton
Keyword(s):  
New York ◽  
Initial Public Offering ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Financial Accounting ◽  
Learning Needs ◽  
York Stock Exchange ◽  
Accounting Courses ◽  
Chinese Company ◽  
Public Offering

ABSTRACT In September 2014, the Chinese e-commerce giant Alibaba Group Holding Limited issued shares on the New York Stock Exchange, making it the world's largest initial public offering. This case examines different aspects of the Alibaba Group's initial public offering, including Alibaba Group's business model, financial reporting and corporate governance, as well as the macroeconomic, political, and legal environment in which the company operates. In addition, this case will familiarize students with the risks and opportunities for Chinese companies and investors when a Chinese company lists in the U.S. This case is suitable for financial accounting and international accounting courses at the intermediate and advanced levels for undergraduates as well as graduate students. The case is scalable, and instructors can choose from multiple sections of the case and different case questions to tailor the case difficulty to their students' learning needs.

Jones Enterprises Real Estate Investment Trust: Comparing U.S. and Canadian Acquisition Accounting, Balance Sheet and Security Commission Reporting, and Initial Public Offering Location

2018 ◽  
Vol 33 (2) ◽  
pp. 35-42
Author(s):  
Natalie Tatiana Churyk ◽  
Alan Reinstein ◽  
Lance Smith
Keyword(s):  
Real Estate ◽  
Initial Public Offering ◽  
Financial Reporting ◽  
Balance Sheet ◽  
Accounting Students ◽  
Real Estate Investment ◽  
Generally Accepted Accounting Principles ◽  
Balance Sheets ◽  
Advantages And Disadvantages ◽  
Public Offering

ABSTRACT Based on a Big 4 real estate audit partner's client, this case introduces graduate research and advanced financial accounting students to acquisition accounting under U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS), provides a perspective on real estate investment trusts (REITs), and requires analyzing a U.S. versus Canadian (Ontario) initial public offering (IPO). Students list U.S. and Canadian advantages and disadvantages of REITs, record a portfolio purchase, prepare U.S. GAAP and IFRS balance sheets in order to grasp major REIT reporting differences, contrast the key provisions between U.S. and Canadian (Ontario) securities commissions' IPO reporting, and consider ongoing securities commissions' reporting options. Finally, students will recommend whether the IPO should be issued in the U.S. or Canada. Completing the case helps students: (1) grasp U.S. GAAP and IFRS acquisition accounting methods and different REIT presentations; and (2) recognize that the country selected for the IPO depends upon the issuer's circumstances and preferences.

scholarly journals Impact of Changes in Accounting Standards on Earnings Management

2020 ◽  
Vol 2 (2) ◽  
pp. 166-175
Author(s):  
Kawa W. Muhamad ◽  
Subhi M. Saleh ◽  
Kees van Paridon
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Accounting Standards ◽  
Reporting Quality ◽  
Quality Standards ◽  
Financial Reporting Quality ◽  
High Quality ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards ◽  
Accounting Principles

This study considers the question whether the changes in Accounting Standards has led to companies making less use of earnings management. The paper is an attempt to investigate whether the application of high quality standards like International Financial Reporting Standards (IFRS) is related to high financial reporting quality. This study addresses this issue empirically. Furthermore, this research examines whether German companies that have applied IFRS have less earnings management compared to German companies that report according to the German Generally Accepted Accounting Principles (GGAAP). The sample, consisting of two equally large listed companies in Germany (Südzucker Group and Henkel Group) from 2003-2014. The study suggests that IFRS-adopters show different earnings management performance compared to companies reporting under German GAAP. This finding contributes to the discussion on whether high quality standards are appropriate and operational in countries with weak investor protection rights. The result shows that adopters of IFRS in Germany can be related with less use of earnings management as a result of changes in accounting standards. This result is contradictory with previous research that was done by Van Tendeloo and Vanstraelen, (2005), and consistent with the previous research conducted by Ball et al. (2003).

Articulating accounting principles

2016 ◽  
Vol 17 (2) ◽  
pp. 118-135 ◽  
Author(s):  
Brian A. Rutherford
Keyword(s):  
Financial Reporting ◽  
Standard Setting ◽  
Financial Accounting ◽  
Accounting Standard ◽  
Content Type ◽  
Accounting Research ◽  
Accounting Principles ◽  
Accounting Theory ◽  
Social Scientific ◽  
Accounting Standard Setting

Purpose – The purpose of this paper is to provide a soundly based epistemological underpinning for the kind of theorisation in which many classical financial accounting researchers engaged and thus to support a renewal of this programme. Design/methodology/approach – The paper draws on pragmatist philosophy and, in particular, on Jules Coleman’s theory of “explanation by embodiment”. The applicability of this theory to the world of financial reporting is discussed. Various theorists and schools within classical accounting theory are examined from the perspective of Coleman’s ideas, focusing particularly on A.C. Littleton’s Structure of Accounting Theory. Findings – The paper finds that classical accounting research works such as Structure of Accounting Theory can be interpreted as the search for Colemanian explanation by embodiment and that this provides them with a soundly based pragmatist underpinning for their theorisation. Research limitations/implications – This paper supports the resumption by academics, qua academics, of work to contribute to accounting standard-setting by offering argumentation that addresses accounting principles and methods directly, rather than only via the social scientific investigation of behaviour in the accounting arena. Practical implications – Such a resumption would contribute positively to future standard-setting. Originality/value – This paper contributes to the defence of classical financial accounting research from the charge of lacking theoretical rigour.

Teaching Intermediate Financial Accounting Using a Business Activity Model

2000 ◽  
Vol 15 (4) ◽  
pp. 583-603 ◽  
Author(s):  
Anthony H. Catanach ◽  
David B. Croll ◽  
Robert L. Grinaker
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Accounting Education ◽  
Financial Accounting ◽  
Professional Service ◽  
Business Activity ◽  
Curriculum Revision ◽  
Activity Model ◽  
Technical Competency ◽  
Accounting Courses

This paper describes a creative approach to the instruction of intermediate financial accounting that relies primarily on a business activity model (BAM). Initially funded by an Accounting Education Change Commission (AECC) grant, this curriculum revision is designed to (1) motivate students for their chosen profession, (2) promote their technical competency, and (3) develop in them an expanded set of educational objectives including critical-thinking, communication, and research skills. The BAM emphasizes financial disclosure and technical research as well as those topics commonly found in “traditional” intermediate accounting courses. Working in professional service teams, students mimic the accounting and financial-reporting processes found in the “real world” by conducting analytical reviews, soliciting information from clients, preparing adjusting and correcting entries, and drafting financial statements and notes for a fictitious client company.

Baywatch International: A Case Linking Financial-Reporting, Business, and User Decisions

2000 ◽  
Vol 15 (4) ◽  
pp. 605-633 ◽  
Author(s):  
Fred Phillips ◽  
Kevin Morris ◽  
Kristina Zvinakis
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Financial Accounting ◽  
Financial Statement ◽  
Technical Knowledge ◽  
Capital Asset ◽  
Financial Statement Analysis ◽  
Accounting Courses ◽  
Reporting Decisions ◽  
Asset Depreciation

Baywatch International is a hypothetical company that manufactures figure-enhancement products—a rapidly growing industry that is featured frequently in Fortune and on CNNfn. The executives at Baywatch are making financial-reporting decisions pertaining to the company's receivables, inventories, loss contingencies, and capital asset depreciation. These decisions require technical knowledge of fundamental topics covered in introductory financial accounting courses, as well as an appreciation for relationships among financial-reporting, business, and user decisions. Consideration of the implications for financial statement analysis, earnings management, and financial-reporting ethics also is encouraged.

2. The international evolution of accounting

2014 ◽  
Author(s):  
Christopher Nobes
Keyword(s):  
Financial Reporting ◽  
Accounting Information ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Generally Accepted Accounting Principles ◽  
Financial Reporting Standards ◽  
Financial Position ◽  
The Us ◽  
Company Directors ◽  
Double Entry

What are the purposes of accounting? How do these purposes affect how accounting works? What is double-entry bookkeeping? ‘The international evolution of accounting’ considers these questions and outlines some examples of how different countries have contributed to the development of accounting. Double-entry bookkeeping, conceived in thirteenth-century Italy, balances the debits and credits. It enables the calculation of profit and the presentation of a business's financial position. Publication of accounting information is required to protect shareholders and creditors from potential malpractice by company directors. The globalization of world business has resulted in International Financial Reporting Standards, now used by around 90 countries. The US use their Financial Accounting Standards Board's ‘generally accepted accounting principles’.

scholarly journals Mnemonics: An Alternative Memory Enhancement Technique in Teaching Accounting Theories

2021 ◽  
Vol 16 (1) ◽  
pp. 83-90
Author(s):  
Nor Kartini Mohd Rodzi ◽  
Norshimah Abdul Rahman ◽  
Nazirah Naiimi ◽  
Norizam Ahmad @Muhammad ◽  
Susilawani Ayob ◽  
...  
Keyword(s):  
Financial Reporting ◽  
Financial Accounting ◽  
Accounting Students ◽  
Average Score ◽  
P Value ◽  
Effective Technique ◽  
Memory Enhancement ◽  
Enhancement Technique ◽  
Dummy Variable ◽  
Score Index

It is a belief that mnemonic will increase students’ understanding and thus, foster their academic performance. This study investigated the effectiveness of using mnemonics in teaching accounting theories for an intermediate financial accounting course. A sample of 96 accounting students enrolling the financial reporting course was chosen to take part in this study. The selected students were separated into 2 groups: M1 was with mnemonic training and M0 was without mnemonic training. The findings revealed that mnemonic is an effective technique in teaching accounting theories and enhancing student's ability to envisage and remember accounting concepts and theories. This is reinforced from finding that the average score index for students with mnemonic training was 4.985 higher than those without mnemonic training. In addition, the p-value for the dummy variable mnemonic training (p=.000) was very significant, suggesting that there was statistical evidence of a difference in average score index between the students with a mnemonic and no mnemonic training.

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