Description
TABLE OF CONTENTS
9 Long-Lived Assets 9-1
Capitalizing on Education 9-2
9.1 Property, Plant, and Equipment 9-3
Determining the Cost of Property, Plant, and Equipment 9-4
9.2 Depreciation 9-8
Factors in Calculating Depreciation 9-8
Depreciation Methods 9-9
Comparison of Depreciation Methods 9-13
Partial-Period Depreciation 9-14
Depreciation and Income Tax 9-16
9.3 Revising Periodic Depreciation 9-17
Capital Expenditures During Useful Life 9-18
Impairments 9-18
Cost Model Versus Revaluation Model 9-19
Changes in Depreciation Method, Estimated Useful Life, or Residual Value 9-20
Revised Depreciation Calculations 9-20
9.4 Disposal of Property, Plant, and Equipment 9-22
Steps in Recording Disposals of Property, Plant, and Equipment 9-22
Retirement of Property, Plant, and Equipment 9-23
Sale of Property, Plant, and Equipment 9-25
Exchanges of Property, Plant, and Equipment 9-26
9.5 Natural Resources 9-30
Cost 9-30
Depletion 9-30
Disposal 9-32
9.6 Intangible Assets and Goodwill 9-32
Accounting for Intangible Assets 9-33
Intangible Assets with Finite Lives 9-34
Intangible Assets with Indefinite Lives 9-35
Goodwill 9-36
9.7 Statement Presentation and Analysis 9-37
Presentation 9-37
Analysis 9-38
10 Current Liabilities and Payroll 10-1
Would You Like to “Workify” from Home? 10-2
10.1 Certain Current Liabilities 10-3
Accounts Payable 10-3
Unearned Revenues 10-4
Operating Line of Credit and Bank Overdraft 10-5
Short-Term Notes Payable 10-5
Sales Taxes 10-7
Property Taxes 10-7
Current Maturities of Long-Term Debt 10-8
10.2 Uncertain Liabilities 10-9
Provisions 10-10
Contingencies 10-13
10.3 Payroll 10-15
Employee Payroll Costs 10-15
Employer Payroll Costs 10-18
Recording the Payroll 10-19
Internal Control for Payroll 10-21
10.4 Financial Statement Presentation 10-24
Appendix 10A: Payroll Deductions 10-25
Mandatory Payroll Deductions 10-25
Using Payroll Deduction Tables 10-27
11 Financial Reporting Concepts 11-1
Financial Reporting in Uncertain Times 11-2
11.1 The Conceptual Framework of Accounting 11-3
11.2 The Objective of Financial Reporting 11-5
Elements of Financial Statements 11-6
11.3 Qualitative Characteristics of Useful Financial Information 11-7
Fundamental Characteristics 11-7
Enhancing Qualitative Characteristics 11-9
Application of the Qualitative Characteristics 11-11
Differences in Qualitative Characteristics under IFRS and ASPE 11-11
11.4 Recognition and Measurement Criteria 11-12
General Recognition 11-12
Revenue Recognition 11-14
Variable Consideration 11-20
Expense Recognition 11-28
Measurement of Elements 11-29
Violation of Recognition and Measurement Concepts: Errors and Intentional Misstatements 11-30
11.5 Foundational Concepts, Assumptions, and Constraints 11-33
Concepts and Assumptions 11-34
Constraints 11-35
Summary of Conceptual Framework 11-36
12 Accounting for Partnerships 12-1
Partnering for Success 12-1
12.1 Partnership Form of Organization 12-3
Characteristics of Partnerships 12-3
Advantages and Disadvantages of Partnerships 12-5
Partnership Agreement 12-5
12.2 Forming a Partnership 12-6
12.3 Dividing Partnership Profit or Loss 12-8
Profit and Loss Ratios 12-9
Salaries, Interest, and Remainder in a Fixed Ratio 12-10
Closing Entries 12-12
12.4 Partnership Financial Statements 12-14
12.5 Admission of a Partner 12-16
Purchase of a Partner’s Interest 12-16
Investment of Assets in a Partnership 12-17
12.6 Withdrawal of a Partner 12-20
Payment from Partners’ Personal Assets 12-21
Payment from Partnership Assets 12-21
Death of a Partner 12-24
12.7 Liquidation of a Partnership 12-25
No Capital Deficiency 12-26
Capital Deficiency 12-27
13 Introduction to Corporations 13-1
Incorporation Brews Up Growth 13-1
13.1 The Corporate Form of Organization 13-3
Characteristics of a Corporation 13-3
Operating a Corporation 13-5
13.2 Share Capital 13-8
Share Issue Considerations 13-9
Common Shares 13-11
Preferred Shares 13-12
13.3 Corporate Income Statements 13-15
13.4 Cash Dividends 13-17
Necessary Conditions to Pay Cash Dividends 13-17
Entries for Cash Dividends 13-18
Preferred Share Cash Dividends 13-19
13.5 Reporting Retained Earnings 13-21
Statement of Retained Earnings (ASPE Only) 13-21
Closing Entries for a Corporation 13-21
13.6 Statement Presentation and Analysis 13-24
Presentation of Shareholders’ Equity 13-24
Analysis 13-25
14 Corporations: Additional Topics and IFRS 14-1
Flying High as a Public Company 14-1
14.1 Stock Dividends and Stock Splits 14-3
Stock Dividends 14-3
Stock Splits 14-5
Comparison of Effects 14-6
14.2 Reacquisition of Shares 14-7
Reacquisition below Average per Share Amount 14-8
Reacquisition above Average per Share Amount 14-9
14.3 Comprehensive Income 14-11
Continuing and Discontinued Operations 14-11
Other Comprehensive Income 14-13
14.4 Accounting Changes 14-16
Changes in Accounting Estimates 14-16
Changes in Accounting Policies 14-16
Correction of Prior Period Errors 14-17
14.5 Reporting Changes in Shareholders’ Equity 14-19
Summary of Shareholders’ Equity Transactions 14-19
Statement of Changes in Shareholders’ Equity 14-20
14.6 Analyzing Shareholders’ Equity 14-23
Earnings Performance 14-23
Dividends Record 14-25
15 Non-Current Liabilities 15-1
Social Responsibility Pays Off 15-1
15.1 Bonds Payable 15-3
Types of Bonds 15-5
Bond Issuance 15-6
Bond Trading 15-6
15.2 Bond Pricing 15-8
Discount or Premium on Bonds 15-12
15.3 Accounting for Bond Issues 15-14
Issuing Bonds at Face Value 15-14
Issuing Bonds at a Discount 15-15
Issuing Bonds at a Premium 15-19
Issuing Bonds at a Discount Versus at a Premium 15-22
Bond Interest Accruals 15-23
15.4 Accounting for Bond Retirements 15-25
Redeeming Bonds at Maturity 15-25
Redeeming Bonds before Maturity 15-25
15.5 Instalment Notes Payable 15-27
Fixed Principal Payments 15-27
Blended Payments 15-28
Current and Non-Current Portions 15-29
15.6 Lease Liabilities 15-31
Accounting for Lease Arrangements 15-31
15.7 Statement Presentation and Analysis 15-35
Presentation 15-35
Analysis 15-36
16 Investments 16-1
Growing through Strategic Investments 16-1
16.1 Classifying Investments 16-3
Non-Strategic Investments 16-3
Strategic Investments 16-5
16.2 Accounting for Debt Investments Reported at Amortized Cost 16-7
Money-Market Instruments 16-8
Bonds 16-10
16.3 Accounting for Fair Value Investments 16-15
Fair Value through Profit or Loss: Equity Investments (Common Shares) 16-16
Fair Value through Profit or Loss: Debt Investments (Bonds) 16-18
Fair Value through Other Comprehensive Income: Equity Investments (Common Shares) 16-19
16.4 Accounting for Strategic Investments 16-23
Equity Method 16-25
Cost Method 16-26
16.5 Reporting of Investments 16-28
Balance Sheet 16-28
Income Statement and Statement of Comprehensive Income 16-29
Summary of Investments 16-30
17 The Cash Flow Statement 17-1
Stingray Streams in Cash 17-1
17.1 Reporting of Cash Flows 17-3
Usefulness of the Cash Flow Statement 17-3
Content of the Cash Flow Statement 17-3
17.2 Preparing the Statement of Cash Flows—Indirect Method 17-7
Indirect Method 17-8
17.3 Preparing the Cash Flow Statement—Direct Method 17-27
Direct Method 17-27
17.4 Using the Information in the Financial Statements 17-34
Free Cash Flow 17-35
18 Financial Statement Analysis 18-1
From Fashion Trends to Earnings Trends 18-1
18.1 Basics of Financial Statement Analysis 18-3
Comparative Analysis 18-4
Tools of Analysis 18-4
18.2 Horizontal Analysis 18-6
Balance Sheet 18-7
Income Statement 18-8
18.3 Vertical Analysis 18-11
Balance Sheet 18-11
Income Statement 18-13
18.4 Liquidity Ratios 18-15
Current Ratio 18-15
Acid-Test Ratio 18-16
Receivables Turnover 18-17
Inventory Turnover 18-18
Operating Cycle 18-19
Liquidity Conclusion 18-19
Summary of Liquidity Ratios 18-20
18.5 Solvency Ratios 18-21
Debt to Total Assets 18-22
Interest Coverage 18-22
Free Cash Flow 18-23
Solvency Conclusion 18-23
Summary of Solvency Ratios 18-24
18.6 Profitability Ratios 18-25
Gross Profit Margin 18-25
Profit Margin 18-26
Asset Turnover 18-26
Return on Assets 18-27
Return on Equity 18-27
Earnings per Share (EPS) 18-28
Price-Earnings (PE) Ratio 18-28
Payout Ratio 18-29
Profitability Conclusion 18-29
Summary of Profitability Ratios 18-29
18.7 Limitations of Financial Statement Analysis 18-32
Alternative Accounting Policies 18-33
Comprehensive Income 18-33
Quality of Information 18-33
Economic Factors 18-34
Appendix A Specimen Financial Statements A-1
Appendix B Sales Taxes B-1
Appendix PV Present Value Concepts PV-1
Company Index / Subject Index I-1
