A
A. C. Nielsen Company, 721n. 17
Abbott Laboratories, 219–220, 967
Abdel-khalik, A. Rashad, 1283n. 9
Abnormal shortages, 493
Absences, compensated, 712–714
Accelerated Cost Recovery System (ACRS), 614
Accountability, 54
Accounting:
ethics in, 21
Accounting changes, see Change(s) in accounting entries
adjusted trial balance, 108
post-closing trial balance, 113
preparing financial statements, 108–110
reversing entries, 113
steps of, 114
transactions and other events, identifying/recording, 89–91
trial balance, 96
Accounting information system, 84–89
Accounting policies:
accounting for changes in, 1404–1406
disclosure of, 1491
Accounting principle, changes in, see Change(s) in accounting principle
Accounting Principles Board (APB), 9, 27. See also Opinions of the Accounting Principles Board
Accounting Research Bulletins, 9
Accounting Research Study No. 13 (“The Accounting Basis of Inventories”), 481n. 5
Accounting standards:
economic consequences of, 17
need for development of, 7
Accounting Standards Executive Committee (AcSEC), 10, 541n. 2, 557n. 6, 559n. 12
Accounting Standards Updates, 11, 12, 57n. 16
Accounting theory, cash basis accounting and, 118–120
Accounts payable(s), 703
decrease in, 1425
increase in, 1422
indirect method of analyzing, 1418–1419
Accounts receivable(s), 349–358
days to collect, 374
decrease in, 1421
increase in, 1424
indirect method of analyzing, 1418
net, accounts receivable, 1438–1440, 1447
trade, 363
Accounts receivable turnover, 372
Accruals:
adjusting entries for, 102–108
as class of adjusting entries, 97
in reversing entries illustration, 124–125
cash basis accounting vs., 118–123
conversion to cash basis accounting, 120–123
Accrued expenses:
adjusting entries for, 104–108
as class of adjusting entries, 97
Accrued interest, adjusting entries for, 105
Accrued revenue(s):
adjusting entries for, 103–104
as class of adjusting entries, 97
overstatement of, 1369
Accrued salaries, adjusting entries for, 106–107
Accrued wages, failure to record, 1368
Accumulated benefit obligation, 1187
Accumulated depreciation, 1422, 1425, 1448–1449
Accumulated other comprehensive income, 280
Accumulated other comprehensive loss, 847n. 21
Accumulated postretirement benefit obligation (APBO), 1220
Accumulated rights, 713
Acid-test ratio, 730
Acquisition costs, 556–560, 605
ACRS (Accelerated Cost Recovery System), 614
AcSEC, see Accounting Standards Executive Committee
Activision Blizzard, 1411
Activity method for depreciation, 593
Activity ratios, 245, 1523, 1524
Actually refinancing, 706
Actual return on plan assets, 1191–1192, 1221, 1254–1255
Actuarial present value, 1188n. 7
Actuaries, 1187
Adaptec, 911
ADC Telecommunications, 347
Additions, 558
Additional paid-in capital, 826
Adecco, 83
Adelphia Communications, 54, 783, 1518
Adjunct account, 774
Adjustable-rate mortgage, 782
Adjusted subsequent events, 1551
Adjusted trial balance, 85, 108, 113, 129
defined, 85
prior period, 181
for statement presentation, 101–102
types of, 97
for unearned revenues, 102
Adjustments columns, 127
Administrative expenses, on income statement, 164
Adverse opinion, 1511
AES, 176
After-closing trial balance, 85
Aging schedule, 357
Agricultural inventory, 530–532
Agricultural produce, 530
AICPA, see American Institute of Certified Public Accountants
AICPA Task Force on LIFO Inventory Problems, 479n. 3
Airbus, 1553
Airline industry, 215, 591n. 2
Air Products & Chemicals, 979n. 14
Airtran, 215
Alaska Airlines, 1307
Alberto-Culver Company, 240
Allied Products Corporation, 835
Allowance accounts:
for multiple periods, 480
and net realizable value adjustments, 529
Alltel Corp., 707
Almost Family, Inc., 107
Altera International, 965
Alternative minimum tax (AMT), 1140
Alterra Healthcare Corp., 217–218
Altman, E. I., 226
Amazon.com, 158, 159, 214, 224, 276, 427, 657, 821, 885, 899, 933–934, 955, 965–966
Ameren, 611
American Airlines, 102, 215, 708, 822, 1231, 1273, 1308–1309
American Bar Association, 822
American Express, 366
American Home Mortgage Investment Corp., 1041
American Institute of Certified Public Accountants (AICPA), 9–10, 597n. 6
and APB, 9
and big GAAP/little GAAP issue, 1550n. 29
changing role of, 10
and Committee on Accounting Procedure, 9, 26, 27
and GAAP standards development, 9
and government intervention, 29
and SEC, 7
Task Force on LIFO Inventory Problems, 479n. 3
American Maize-Products Company, 433
America Online, 650
Amgen, 831
AM International, 425
Amortization:
adjustment to net income for, 1434–1435
corridor, 1199–1200, 1210–1211, 1223
defined, 590
effective-interest method, 314–315
on postretirement benefit plans, 1223
of prior service costs, 1194–1195, 1221
straight-line, 1195
on units-of-production basis, 657n. 3
Amortization policies, 55
Amortized cost, 953, 1028–1029
Ampco-Pittsburgh Corporation, 596, 1358
AMR Corporation, 1231
AMT (alternative minimum tax), 1140
Anadarko Petroleum Corporation, 546, 999
Anheuser-Busch, 1525
Anixter Bros., Inc., 425
Annual interest rate, in compound interest tables, 292–293
Annualized approach, 1505
Annual reports:
content and organization of, 247
on the Internet, 19
due, present value of, 308–311
ordinary, 291–292, 306–307, 309–311
ordinary, future value of, 300–302, 304–306
Ante, S. E., 480
Antidilutive securities, 904, 908–909, 921n. 22
APB (Accounting Principles Board), 9, 27
APBO (accumulated postretirement benefit obligation), 1220
APB Opinions (Opinions of the Accounting Principles Board), 9, 11–13
Apple Inc. (Apple Computer), 189, 241, 349, 358, 488, 654, 657, 670, 718, 822, 1054, 1140
April-Marcus, Inc., 422
Arbitrageurs, 979
Arcady, A. T., 1214n. 18
AROs (asset retirement obligations), 723–724
Arrears:
dividend in, 835
preferred dividends in, 707
Articulation, 52
Artificial loss, 1308n. 19
Artistic-related intangible assets, 655
Asset(s):
on balance sheet, 216
biological, 530
contingent, 758
depreciable base for, 590
in lessee accounting, 1278
of pension plans, 1197–1198, 1260
recognition of, 1125
sales price of, 1296
soft, 19
transfer of, 791
Asset expenditures, 557
Asset gains and losses, with pension plans, 1197–1198, 1260
Asset-liability method, 1144
Asset-linked bonds, 765
Asset retirement obligations (AROs), 723–724
Asset turnover ratio, 611
Asset valuation, 556
Atlantic Richfield, 608
AT&T Inc., 90, 595, 888–889, 1202, 1217, 1219
Attmore, R. H., 1227
Attribution period, 1219
Audit and Accounting Guides (AdSEC), 10
emphasis of matter in, 1510
and expectation gap, 1519n. 24
on going concern of entity, 1509
and lack of consistency, 1510
and management's responsibilities for financial statements, 1512n. 14
qualified/adverse/disclaimer opinion, 1510–1511
standards for, 1508
unqualified/clean opinion, 1508–1510
Automatic Data Processing, 768
Available-for-sale securities, 182n. 21, 218, 952, 955–959, 962–964, 968
Average-cost method:
for cost flow assumption, 429–430
for security purchases, 962n. 6
Average days to sell inventory, 496
Avis, 1081
Avon Products, 236
AXA, 32
Ayers, B., 1122
B
Baan NV, 1109
Bad debts:
adjusting entries for, 107–108
failure to adjust for, 1369–1370
Bahree, B., 607
Baker Hughes, Inc., 537
Balance sheet(s), 85, 214–227, 243
accounting policies on, 236, 237
assets on, 216
and cash flows statement, 1415, 1421, 1423, 1429
classified, 215
columns on, 129
comparative, 1445
contractual situations on, 236, 237
debit vs. credit balances on, 1443–1444
deferred tax reporting on, 1138–1140
elements of, 216
equity on, 216
events after preparation of, 1495–1496
presentation of, 185
stockholders’ equity on, 88, 225–226, 847–850
usefulness of, 214
Balance sheet (percentage-of-receivables) approach, 356–357
Ball, J., 607
Banks:
operating cash flows in, 1439–1440
treatment of purchases/sales of loans/securities by, 1414n. 2
Bank, David, 709
Bank charges, reconciling, 378–381
Bank credits, reconciling, 379
Bank errors, reconciling, 379
Bankers Trust, 979
Bankia Group, 364
Bank of America, 5, 83, 822, 984, 1269, 1273, 1307, 1440
Bank overdrafts, 348
Bankruptcy-prediction model, 226
Barclays, 984
Bargain purchase option, 1277, 1298, 1338
Bargain purchase option test, 1275–1276
Bargain renewal option, 1334
Barrick Gold Corporation, 523–524
Barth, Mary, 890n. 6
Barth Industries, 716
Basis Technology, 965
Basket purchase, 482
Bearer (coupon) bonds, 765
Bear Stearns & Co., 224
Beaver, W. H., 161n. 2
Beijing Lenovo Parasaga Information Technology, 966–967
Benchmark, verifiable, 56
Benefits/years-of-service actuarial method, 1189–1190, 1219n. 25
Beresford, Dennis R., 972n. 11
Berkshire Hathaway Inc., 32, 822, 1486
Bernanke, Ben S., 316
Beru AG Corporation, 700
Best Buy, 68, 114, 134, 352, 373, 419, 472–474, 489, 727, 730, 785, 823, 849, 1509
Best Western, 1081
Bhamornsiri, Sak, 1064n. 19
Biddle, Gary C., 445n. 20
“Big GAAP versus little GAAP” issue, 1490, 1550n. 29
Biggs, Stanley F., 484n. 8
Bill and hold sales, 1050
Biological assets, 530
Birchall, J., 420
Black & Decker, 68
Bloom, R., 445
Bloomingdale's, 488
BLS (Bureau of Labor Statistics), 440n. 9
Blumenstein, Rebecca, 557
BMC Industries, Inc., 716
BMW, 875
Boeing Capital, 1271
Boeing Corporation, 58, 100, 216, 416, 538, 556, 1067–1068, 1219, 1273, 1284
Boise Cascade, 484
Bonds, 763. See also specific types, e.g.: Discount bonds
between-interest-date issuance of, 770
convertible, 765, 884–886, 890, 919–920, 944–946
effective-interest method for, 770–774
and extinguishment of debt, 775–776
issuance of, 764, 768–770, 816
monitoring investments in, 765–766
notes vs., 777
par on interest date, issuance at, 768
types of, 765
Bond amortization, effective-interest method of, 314–315
Bond discount, amortization of, 1435
Bondholders, 1522
Bond indenture, 765
and contra accounts, 774
decrease in, 1426
discount, 774
increase in, 1422
Bond premium:
amortization of, 1435
Bonus payments, and change in accounting method, 1365–1366
Book depreciation, tax depreciation vs., 617
Book of original entry, 85, 91
Book value, 836
bonds, 101
for preference shares, 876
Book value per share, 850, 853–854
Borrowing rate, 1335
Borrus, A., 768
Boston Scientific, 166
BP, 32
Brand images, 670
“Bright line” cutoffs, 1334n. 22
Brinker International Inc., 1282
Brokers, 1414n. 2
Brokerage costs, 1030n. 44
Brown, K., 48
Brown, K. L., 1058n. 18
Brown, Robert Moren, 443n. 18
Brown Group, Inc., 845
Brown Shoe Company, 433
Budge, Bruce P., 1437n. 8
Buffet, Warren E., 1486
Building depreciation, 1422, 1448–1449
Burden, 540
Bureau of Labor Statistics (BLS), 440n. 9
Burger King, 1081
Burlington Industries, 481n. 4
Burnap, N., 1204
Burton, John C., 8n. 4
Business combinations:
intangible assets acquired in, 650n. 1
as present value-based measurement, 289
Business-method patents, 656
Business organization, see Corporate form
of outstanding stock, 837n. 12
sales with, 1049
of treasury stock, 837n. 12
Byrnes, Tracey, 1053
C
Cablevision Systems, 836
Calhoun, Charles H., III, 1083n. 31
Callable preferred stock, 835
Callaway Golf Co., 1315
Call option, 980
Calpine, 785
Campbell Soup Company, 621, 962–963, 1231, 1412
Cannondale Corporation, 68
Canon, 666
CAP, see Committee on Accounting Procedure
Capettini, Robert, 554n. 10
Capital:
contributed, 875
earned, 875
paid-in, 875
Capital assets errors, 1360
Capital expenditures, 536–537, 557
Capitalization criteria:
for lessor, 1285
Capitalization period, 542
Capitalized lease accounting, 1272n. 1, 1273–1278
bargain purchase option test in, 1275–1276
economic life test in, 1276
recovery of investment test in, 1276–1278
transfer of ownership test in, 1275
Capital leases, 1275–1278, 1333
Capital lease method, 1278–1281
Capital maintenance approach, 163n. 4
Capital markets, integration of, 32
Capital One Financial, 236
Capital structure ratios, 1523n. 26
Captive leasing companies, 1271
Carcache, B., 614n. 15
Cargill, 822
Carrefour, 756, 1028, 1334, 1553
Carrybacks, 1116, 1132–1133, 1145
Carryforward(s), 1116, 1145, 1176–1177. See also Loss carryforwards
Carrying value (bonds), 770n. 3, 816
Cash and cash equivalents, 217–218, 346–349, 1413n. 1, 1437n. 7
alternate terminology for, 346n. 2
basis of valuation of, 217
determining change in, 1416, 1417, 1420, 1423
internal control over, 376
from operating activities, 231
and statement of cash flows, 1480, 1481
Cash balances, physical protection of, 378
Cash-balance pension plans, 1214n. 18
Cash basis accounting, 6
and accounting theory, 118–120
accrual-basis accounting vs., 118–123
conversion to accrual basis, 120–123
financial statements, 119
modified cash basis, 120
of pension plan, 1189n. 10
theoretical weaknesses of, 123
warranties, 719
and bank balances reconciliation, 378–381
and imprest petty cash system, 377–378
and physical protection of cash balances, 378
Cash crunch, 233
Cash debt coverage, 234
Cash deposits, returnable, 707
Cash discounts, 351–352, 427, 547
Cash dividends payable, 1440
Cash flows, 7n. 2
determining future change of, 550n. 7
Cash flow risk, 987
Cash flow statement, see Statement of cash flows
Cash funds, 346
Cash-generating units, 696
Cash payments:
classes of, 1429
for income taxes, 1432
for operating expenses, 1431–1432
special rules applying to, 1434
Cash rebates, 721
Cash receipts:
classes of, 1429
from customers, 1430
special rules applying to, 1434
Catanach, A., 1051
Caterpillar Financial Services Corp., 1271, 1278–1281, 1284, 1286–1289
Caterpillar Inc., 100, 442, 970, 979, 1271, 1291–1295, 1298–1300, 1498
CDs (certificates of deposit), 346n. 1
CECL (“Current Expected Credit Loss”) model, 374
Cendant, 17
Cenker, W., 445
CenturyTel, 1198
Certificates of deposit (CDs), 346n. 1
Change(s) due to error, 1363
Change(s) in accounting (general), 1344
from or to equity method, 1377–1380
Change(s) in accounting estimate, 180, 1357–1359, 1363, 1404
Change(s) in accounting policies, 1404–1406
Change(s) in accounting principle, 179–180, 1344–1366
accounting for/reporting of, 179–180, 1353–1354
direct/indirect effects of, 1355
disclosure of, 1493
and impracticability, 1356
prospective reporting of, 1345
and retained earnings adjustment, 1354
Change in cash, determining, 1416, 1417, 1420, 1423
Changes in equity, statement of, 877–878
Change(s) in reporting entity, 1359, 1363
Change-in-the-present-value method, 1299–1300
Channel stuffing, 1053
Checks:
outstanding, 379
paper, 378n. 17
postdated, 346
Check fraud, 378n. 17
Checking accounts, 377
Cheney, Richard E., 1525n. 27
Chesapeake Corporation, 237
Chesapeake Energy Corp., 785, 1419
Chevron, 32
ChevronTexaco, 608n. 10
China National Petroleum, 32
Chipotle, 166
Choice Point, Inc., 999
Christie, Rebecca, 1511
Chrysler Corporation, 31, 54, 444, 600n. 8, 1284, 1346
Ciba-Geigy, 469
CIFR (Committee for Improvements in Financial Reporting), 1343
Cinergy, 899
Cintas, 537
Cisco Systems, 61, 110, 161, 480, 654, 783, 979, 1437n. 7
Citicorp, 170n. 12
Cities Service Company, 729
Citigroup, 49, 170n. 12, 344, 345, 358, 364, 788, 979, 998, 1116–1117, 1119n. 1, 1137n. 6, 1271, 1284
CKE Restaurants Inc., 1282
Clarcor Inc., 713
Class B common stock, 836
Classification:
of financial instruments, 975–976
in statement of financial position, 278–280
Classified balance sheets, 215
Clean opinion (unqualified opinion), 1508–1510
Closing entries, 85, 111–113, 117
CMCS (Commercial Metals Company), 1496–1497
CNG (Consolidated Natural Gas Company), 332–333
Coach, Inc., 166, 1486–1487, 1498
The Coca-Cola Company, 20, 31, 76, 97, 151, 176, 203, 274, 404–405, 522, 559, 635, 650, 658, 670, 690, 750, 813, 822, 843n. 17, 872, 897, 899, 940, 952, 979, 984, 997, 1024, 1107, 1173, 1184, 1248, 1402, 1412, 1478, 1546
Codification Research System (CRS), 14
Cohesiveness of reporting, 185–186
Collaterized receivables, 366n. 11
Collection float, 376
Columbia Sportswear Company, 677
Combination methods for depreciation, 597
Comcast, 1497
Comiskey, Eugene E., 1215n. 19, 1443
Commercial Metals Company (CMCS), 1496–1497
Commercial paper, 346n. 1
Commitments, disclosure of, 1492
Committee for Improvements in Financial Reporting (CIFR), 1343
Committee on Accounting Procedure (CAP), 9, 27, 842n. 15
Commodity-backed bonds, 765
Common-size analysis, 1527–1528
Common stock, 824, 836, 875. See also Preferred stock
adjustment to net income for change related to, 1435
cash dividend paid for, 838n. 13
increase in, 1426
rate of return on, 849
in treasury at cost, 831n. 8
as worksheet entry, 1449
Commonwealth Edison Company, 295, 813
Company names (intangible asset), 654
Comparative analysis, 1526
Comparative balance sheets, 1416, 1421, 1424, 1445
Comparative financial statements, correcting errors on, 1362–1363
Compensating balances, 347
Compensation plans:
dilutive securities issuance in, 904n. 15
effective, 891
stock compensation plans, 891–892
Completed-contract accounting method, 1057, 1063–1064, 1067
Completeness, 49
Completion-of-production basis, 1068
Complex capital structure EPS, 904–912
contingent issue agreement, 908
convertible securities—diluted EPS, 905–907
options and warrants—diluted EPS, 907–908
presentation and disclosure of, 909–910
simple vs., 900
Components, 170
Component depreciation, 597n. 6, 638–639, 1520
Composite depreciation rate, 596
Composite life, 596
Composite methods for depreciation, 595–597
Composite rate, 357
Compounded continuously, 293n. 4
Compounded daily, 293
Compound instrument, 942
future value as variable in, 294
number of time periods, 294
present value as variable in, 294
rate of interest as variable in, 294
and Social Security, 291
variables fundamental to, 294
Comprehensive dollar-value LIFO method, 437–438
Comprehensive income, 182–186, 971–972
defined, 53
display requirements of, 183n. 22
errors in, 1360
one-statement approach, 183
two-statement approach, 183, 184
Computer Associates, 899
defined, 42
objective of financial reporting, 45
qualitative characteristics of information, 45–52
Condensed income statements, 166–167
Conditional expenses, 715
Confirmatory value, 47
Conglomerate (diversified) companies reporting, 1497–1501
Conservatism, 49n. 8
Consigned goods, 422
Consignment shipment, 422
Consolidated Edison, 539
Consolidated financial statements, 967
Consolidated Natural Gas Company (CNG), 332–333
Consolidated statements of cash flows, 1434
Constant-currency financial reports, 55
Construction contracts, 1110–1111
Continental Airlines, 215, 1307
Continental Trucking, 963
defined, 237
disclosure of, 1492
errors in, 1360
Contingent assets, 758
Contingent liabilities, 700–701, 754, 757. See also Loss contingencies
Contingent shares, 908
Continuing franchise fees, 1083
Continuously compounded, 293n. 4
Contra accounts, and bonds payable, 774
Contracts, onerous, 757
Contract provisions, 757
Contract-related intangible assets, 655–656
Contractual situations, on balance sheets, 236, 237
Contra items, 241
Contributed capital, 875
Contributions, accounting for, 555–556
Contributory pension plans, 1184
Control device, 489
Controlling interest, 967
Convenience financial statements, 1523
Convergence, of U.S. and international standards, 21, 36–38, 414–415, 1346n. 1, 1554
Conversion, involuntary, 561
Convertible bonds, 765, 884–886, 890, 919–920, 944–946
Convertible debt accounting, 884–886
Convertible preferred stock, 835, 886–887, 920
Convertible securities, 905–907
Coolidge, C., 1364
Coon, William R., 437n. 7
Copel CIA, 776
Copyrights, 655
Cornett, C., 1134n. 3
Corning, 911
Corporate bond listings, 765–766
capital stock/share system, 823–824
and ownership interests, 824
state laws, 822
Corporate taxes, 710n. 6. See also Income taxes, accounting for
Corporations:
bonds issued by, 763
international accounting standards for, 31
Corrections of errors:
Corridor amortization, 1199–1200, 1202, 1210–1211, 1223
Cost allocation, 429n. 4, 590–601. See also Depreciation
Cost approach, for valuation, 549n. 5
Cost-benefit analysis, 62
Cost-benefit relationship, 61
Cost flow assumption, 421
average-cost method for, 429–430
and first-in, first-out, 430–431
and last-in, first-out, 431–432
Costs included in inventory, 421
period costs, 426
product costs, 426
and treatment of purchase discounts, 426–428
Cost method, 489, 831, 961n. 5
Costs of financing, 426
Cost of goods available for sales or use, 420
multiple pools contributing to, 437n. 7
in periodic inventory system, 418
section of income statement, 164
Cost-of-goods-sold method, 478–479, 528
Cost per unit of product, 606–607
Cost-recovery accounting method, 1077–1078, 1110–1112
Coughlan, J. D., 591n. 1
Counterbalancing errors, 1367–1369
Counterparty, 981n. 18
Countrywide Financial Corp., 371
Coupon bonds, 765
Coupon rate, 766
Coverage ratios, 245, 1523, 1524
CPC International, 358
Craig, Susanne, 959
Credit balance, 85
Credit cards, 367n. 12
disclosure of claims by, 1492
short-term, 1522
Creditor calculations, 794
Credit quality, 768
Credit risk, disclosure of, 372
Credit risk rate of interest, 316
Cron, William R., 441n. 10
Cross-reference items, 241
CRS (Codification Research System), 14
Cummins, C., 607
Cumulative catch-up, 1061
Cumulative-effect approach, 1345
Cumulative preferred stock, 835
Current cash debt coverage, 234
“Current Expected Credit Loss” (CECL) model, 374
Current liability(-ies), 702–715. See also specific types, e.g.: Accounts payable(s)
declared cash dividends as, 840
defined, 702
Current maturities of long-term debt, 705
Current operating performance approach, 168
Current receivables, 349
Current tax expense (benefit), 1121, 1145
Curtailment, 1258
Cushing, Barry E., 443n. 17
Customary form, of balance sheets, 226n. 9
Customer-related intangible assets, 654–655
CVS, 1283
CVS/Caremark Corp., 846
Cycle, accounting, see Accounting cycle
D
Daily compounding, 293
DaimlerChrysler, 1439
Dairy Queen, 1081
Dakdduk, Kenneth E., 1220n. 26
Darden Restaurants Inc., 1282
Date of declaration (stock dividends), 839
Date of payment (stock dividends), 839
Date of record (stock dividends), 839
Days outstanding, 374
Days to collect accounts receivable, 374
Debenture bonds, 765
Debit balance, 85
bad, failure to adjust for, 1369–1370
current maturities of, 705
issue cost (SFAS No. 6), 774n. 5
long-term, see Long-term debt
Debtor accounting, 792n. 16
Debtor calculations, 793
Debt ratings, 768
Debt-rating triggers, 1493
Debt securities, 884
available-for-sale, 218, 952, 955–959, 962–964, 968
held-to-maturity, 218, 953–955
trading, 953, 959–960, 964, 1440
Debt to assets ratio, 787
Debt triggers, 1493
Decision-usefulness approach, 6–7, 45–46
Declaration, date of (stock dividends), 839
Declared cash dividends, 839–840
Declining-balance method, 595
Decreasing-charge methods for depreciation, 594–595
Deductible amounts, 1120
Deductible temporary differences, 1127–1128, 1145
Deep-discount bonds, 765
Deere and Company, 505
Deferrals:
defined, 97
in reversing entries illustration, 124–125
Deferred costs, amortization of, 1434–1435
Deferred income taxes, 1119–1126
adjustment to net income for, 1435
and changes in tax rate, 1130–1132
Congressional acts affecting, 1131n. 2
on income statements, 1125–1126
in interperiod tax allocation (example), 1149–1150, 1152–1153
Deferred payment, 1047
Deferred-payment contracts, 547–548
Deferred taxes, disclosure of, 1493
Deferred tax amount, 1119
Deferred tax assets (DTAs), 1116–1117, 1119, 1123–1126, 1145
asset recognition for, in company records, 1125
recognized as loss carryforwards, 1134n. 4
valuation allowance for, 1125–1126
Deferred tax benefits, 1124
Deferred tax consequences, 1145
Deferred tax expense (benefit), 1121, 1145, 1149–1150, 1152–1153
Deferred tax liabilities, 1119–1122, 1145
in company assessments, 1122
Congressional acts affecting, 1131n. 2
and SFAS No. 6, 1122
and SFAS No. 109, 1122
Defined-benefit plans, 1185–1186
Defined-contribution plans, 1185
DeFord, Mark L., 1360n. 7
Delhaize Group, 280
Dell Computer, 52, 215, 977–978, 1276
Delta Airlines, 58, 102, 215, 979, 1138, 1268, 1273–1278, 1435
De Mesa Graziano, Cheryl, 1041
Denny's, 1081
acquisition costs of, 605
defined, 590
development costs of, 605
exploration costs of, 605
and liquidating dividends, 607–608
in oil and gas industry, 608–609
and recoverable reserves, 607
Deposits:
legally restricted, 348
in transit, 379
Depositor errors, reconciling, 379
Depreciable assets, revaluation of, 642
Depreciable base, for assets, 590
Depreciable tax life (recovery periods), 614
Depreciation, 590–601, 637, 638
activity method for, 593
adjusting entries for, 100–101
and asset vs. liability accounting, 1278
changes in method of, 1358
decreasing-charge methods for, 594–595, 611
defined, 590
factors involved in process of, 590
failure to record, 1369
group and composite methods for, 595–597
hybrid or combination methods for, 597
issues in airline industry, 591n. 2
under partial periods, 598–599
post-September 11, 2001 measures, 614n. 15
rate revision for, 600
and replacement of fixed assets, 599
straight-line method for, 593–594
Depreciation expense, 1422, 1425, 1434–1435
Depreciation policies, 55
basic accounting principles for, 980–984
characteristics of, 983
disclosures for, 991
embedded, 989
Designated market value, 476
Detachable stock warrant, 888, 890
Development costs, 605, 694, 1520
Devon Energy Corporation, 238–239
Dieter, Richard, 1302n. 15
Differential disclosure, 1489–1490, 1549–1550
Diluted earnings per share, 904–908
convertible securities, 905–907
reconciliation for basic and, 910
Dilutive securities, 884–892, 904, 941–947
Diners Club, 366
Dingell, John, 29
Direct costs, incremental vs. internal, 1298–1299
Direct effects (accounting changes), 1405
Direct-financing leases, 1286–1289, 1337–1339
initial direct costs in, 1299
sales-type vs., 1296
Direct method:
for accounts receivable (net), 1439
for determining net cash flow from operating activities, 1427–1433
indirect vs., 1427–1428, 1433–1434
special rules applying to, 1433–1434
Direct verification, 51
Direct write-off method, 353
Disclaimer of an opinion, 1511
Disclosure(s), 372n. 15
of change in accounting estimate, 1358–1359
for derivatives, 991
in financial statements, 1067
of franchisors, 1084
full disclosure principle, 60–61. See also Full disclosure in financial reporting
of interest rates, 289n. 2
for investment securities, 964
of LIFO inventory liquidations, 442n. 13
of operating activities, 1434
as present value-based measurement, 289
quality and quantity of, 1490
of restrictions on retained earnings, 846–847
and Sarbanes-Oxley Act of 2002, 726
and Statement of Position 94-6, 278
Discontinued operations, 164, 170–173, 921n. 21
Discounts:
volume, 1046
Discount bonds, 766, 767, 774, 782n. 13, 816
Discount notes, 779
Discount rate:
leases, 1334
postretirement benefit obligations, 1221n. 27
Discover, 366
Discrete approach, 1503, 1507, 1552, 1553
Distributions to owners, 53
Diversified (conglomerate) companies reporting, 1497–1501
Dividends. See also Stock dividends
date determining receipt of, 839n. 14
and economic recovery, 846
number of companies paying, 846
property, 840
Dividend in arrears, 835
Dividends payable, 707
Dollar-value LIFO method, 435–440, 489, 498–500
and AICPA Task Force on LIFO Inventory Problems, 479n. 3
for determining cost of single item, 478n. 1
example, 436
and price index selection, 438–440
specific-goods pooled approach vs., 435–440
Dollar-value retail method, 436n. 5
Double-declining-balance method, 595
“Double dipping,” 1272
Double-entry accounting system, 86, 154
Double-extension method, 439
Dow Chemical, 821
Dow Jones & Co., 836
Dr. Pepper, 488
Drugstore.com, 50, 427–428, 965
DTAs, see Deferred tax assets
Dudley, Lola W., 899n. 12
Duffy, Wendy A., 543n. 3
DuPont, 840
Durham, Timothy S., 822
Dynegy, 785
E
E. F. Hutton, 348n. 3
Eagle Clothes, Inc., 422
Eaglesham, J., 1117
Earned revenues, 1043
Earnings:
claim by stockholders, 824
retained, see Retained earnings
smooth, and changes in accounting method, 1365–1366
Earnings before interest, taxes, depreciation, and amortization (EBITDA), 592
Earnings management, 161
Earnings per common share, 177–179
Earnings per share (EPS), 177–179, 899
for complex capital structure, 904–912
on income statement, 164, 165n. 7
interim reporting of, 1505
International Financial Reporting Standards for, 941–947
for simple capital structure, 900–904
Eastman Kodak Company, 68, 170n. 12, 358, 1138, 1489
eBay, 999
Ebbers, Bernie, 28
EBITDA (earnings before interest, taxes, depreciation, and amortization), 592
Ecolab, 236
Economic consequences, 17, 17n. 9, 591, 842n. 15
Economic entity assumption, 54, 79
Economic life, 1290n. 12
Economic life test (75% test), 1276, 1333–1334
Economic Recovery Act, 1134n. 3
Economic Recovery Tax Act of 1981, 614
EDGAR (electronic data gathering and retrieval), 1516
Effective-interest method, 361, 778, 779
and accruing interest, 773
asset vs. liability accounting with, 1278
for bonds issued at discount, 771–772
for bonds issued at premium, 772–773
Effective interest rate, 359n. 9
Efficiency ratios, 1523n. 26
Efficient-market hypothesis, 1525
EITF (Emerging Issues Task Force), 12–13, 176
Elective straight-line method, 616–617
Electronic data gathering and retrieval (EDGAR), 1516
Electronic dissemination of financial reports, 1516
Eli Lilly, 658n. 4
Elliott, J., 170n. 12
Elmer's Restaurants, 1319–1320
El Paso Corporation, 607
Elstrom, P., 428
Ely, Michael, 1437n. 8
Embedded derivatives, 989
Emerging Issues Task Force (EITF), 12–13, 176
Employees, as pension beneficiaries, 1185–1186
Employee discounts, 493
Employee payroll deductions, 712
Employee-related liabilities, 710–715
Employee Retirement Income Security Act (ERISA) (1974), 1211–1212
Employee stock purchase plans (ESPPs), 896, 946
Employer(s):
payroll taxes paid by, 712
and pension plan risks, 1185–1186
Employer-sponsored defined contribution pension plans, 1186n. 4
Enacted tax rate, 1130
Ending inventory, misstated, 424
Enhancing qualitative characteristics, 50–52
Enron Corp., 5, 9, 17, 43, 48, 215, 364, 726, 776, 783–785, 829, 959, 979n. 14, 996, 1488, 1493, 1493n. 4, 1518
Entity:
economic entity assumption, 54, 79
as going concern, 1509
in reporting, 1359
Entity perspective, 6
Entries:
adjusting, see Adjustments
reversing, see Reversing entries
Environmental liabilities, 289, 722–726
EPBO (expected postretirement benefit obligation), 1220
Epictetus, 706
EPS, see Earnings per share
Equipment:
depreciation of, 1422
loss on sale of, 1425
purchase of, 1426
as worksheet entry, 1448
Equipment lease-versus buy analysis, 1513n. 15
Equity:
on balance sheets, 216
IFRS for, 875
statement of changes in, 877–878
on statement of financial position, 280–281
Equity awards, share-based, 914
Equity classifications (securities), 884
Equity errors, 1360
Equity holders’ claims, disclosure of, 1492
Equity method, 965–967, 1377–1380, 1435
and fair value options, 967–968
and retrospective application, 1359n. 6
Erickson, Naomi, 1218n. 24
ERISA (Employee Retirement Income Security Act of 1974), 1211–1212
Ernst and Young, 821
Error, information items free from, 49–50
on balance sheet and income statement, 1366–1370
correction of, 180–181, 1359–1366, 1519
example of, 1361–1363, 1370–1373
fraud vs., 1494
noncounterbalancing, 1369–1370
preparation of financial statements with corrections to, 1373–1374
reporting correction of, 1359–1364
types of, 1360
ESPPs (employee stock purchase plans), 896, 946
Estée Lauder, 836
Estimates:
changes in, see Change(s) in accounting estimate
judgments and, 215
Estimated annual effective tax rate, 1505
Ethics, 21
E*Trade Financial, 691
Euronext, 820
European Union, 950
Event, defined, 84
Exchange for noncash consideration, 962n. 6
Exchanges–gain situation, 552–554
Exchanges–loss situation, 551–552
Exchange price, 351
Exchange rate risk, 984
Excise tax, 1214
Ex-dividend date, 839n. 14
Executory contract, lease as, 1273
Exercise price, 980
Expectations gap, 18, 1519n. 24
Expected cash flow approach, 315–317
Expected inflation rate of interest, 316
Expected postretirement benefit obligation (EPBO), 1220
Expected rate of return, 1197, 1201
Expected reversal date, 1140
Expense(s):
conditional, 715
on financial statements, 163
on income statement, 164
postretirement, 1221
prepaid, see Prepaid expenses
Expense expenditures, 557
Expense recognition errors, 1360
Expense recognition principle, 58–60
Expenses subject to year-end-adjustment, 1504–1505
Expense warranty approach, 719–720
Exploration costs of depletion, 605
eXtensible Business Reporting Language (XBLR), 19, 1516
External environment, fraud and, 1518
External indexes, 438n. 8, 440n. 9
Extinguishment of debt, 775–776
Extractive industries, R&D costs of, 667n. 12
Extraordinary items:
adjustment to net income for, 1437
determining, 174n. 15
frequency of, 174n. 14
on income statement, 164, 173–176
interim reporting of, 1505
net-of-tax treatment for, 175n. 17
reporting, after September 11, 2001, 175–176
Extraordinary losses, 175
ExxonMobil Company, 32, 90, 349, 416, 605, 607, 608n. 10, 768, 821, 830, 979, 984, 1270
F
Face rate (interest), 293
Face value (bonds), 766
Factoring arrangement, 367n. 12
Factoring receivables, 366–367
FAF (Financial Accounting Foundation), 10
Failure to adjust for bad debts, 1369–1370
Failure to record accrued wages, 1368
Failure to record prepaid expenses, 1368
Faircloth, Lauch, 29
Fair presentation, 281
Fair value(s), 56–58, 78, 79, 409, 411
of asset, 555
of asset given up, 552
of asset received, 552
on balance sheets, 236, 238–239
debt investments held at, 1029–1031
of derivatives, 980n. 16
equity investments at, 1032–1035
and GAAP/IFRS, 78–79, 1026–1027
hierarchy of, 57, 238, 980n. 16, 1000
of liabilities, 788
and long-term liabilities, 782–783
and monetary exchanges, 553n. 9
of security, 953, 959, 969, 974–975
of stock in lump-sum exchange, 826–827
of stock issued, 841
of stock options, 892
Fair value accounting, economic consequences and, 17
Fair Value Adjustment account, 957
Fair value controversy, 969
Fair value hierarchy, 57, 238, 980n. 16, 1000
Fair value information, disclosure of, 19
Fair value less costs to sell, 639
Fair value method:
changing from, 1378
changing from equity method to, 1377–1378
of stock compensation, 892, 897–899
for unrealized gains/losses, 1425n. 5
Fair value options, 57, 967–968
Fair-value tests:
for indefinite-life intangible impairment, 662–663
for limited-life intangible impairment, 662
Faithful representation, 48–50
Falconbridge Ltd. Nickel Mines, 601
Family Dollar Stores Inc., 846
FASAC (Financial Accounting Standards Advisory Council), 11
FASB, see Financial Accounting Standards Board
FASB Codification Research System (CRS), 14
FASB Concepts, see Statements of Financial Accounting Concepts
FASB Statements, see Statements of Financial Accounting Standards
Federal Insurance Contribution Act (F.I.C.A.), 710–711
Federal Reserve Bank, 316
Federal Unemployment Tax Act (F.U.T.A.), 711
Federated Department Stores, 1419
FedEx Corporation, 68
Feedback value, 1522
FFO (funds from operations), 597n. 7
Fiat, 31
F.I.C.A. (Federal Insurance Contribution Act), 710–711
FIFO, see First-in, first-out
Final reconciling entry, 1451
Finance leases, 1332
Financial accounting, as discipline, 4
Financial Accounting Foundation (FAF), 10
Financial Accounting Standards Advisory Council (FASAC), 11
Financial Accounting Standards Board (FASB), 10–13
on accounting changes, 1344
Accounting Standards Codification, 14, 22
Accounting Standards Updates of, 11
on basis for statement of cash flows, 1413n. 1
and capitalization of interest costs, 426
and cash and cash equivalents, 228n. 10
Codification Research System, 14
Concepts of, 13. See also Statements of Financial Accounting Concepts
conceptual framework, 42, 78–80
convergence, 1554
on differential disclosure, 1489–1490
on direct method on statement of cash flows, 1420
disclosure of receivables, 372
disclosure requirements, 1550n. 29
disclosures effectiveness project of, 1490
and fair value, 17, 56–58, 788, 969
and financial engineering, 785n. 14
on financial instruments, 975–976
financial statement presentation, 159, 179, 281–282, 411
and financial statements, 215–216
and goodwill measurement, 660n. 6
and guarantees, 729n. 21
and held-to-maturity requirement, 953n. 2
and IFRS, 31
improved financial statement presentation, 1517
and investments, 950–951, 1037
and irregular items, 168
and key elements of financial statements, 153
and lease accounting, 1274n. 2, 1283, 1303–1304, 1331–1332, 1339
on leased property, 1278
and liabilities, 818
on loan loss allowances, 374
and loss contingencies, 716
on offsetting, 243
on operating cash receipts/payments, 1433–1434
on pension plans, 1190–1191, 1205n. 14
on postretirement benefits accounting, 1217, 1221n. 27, 1225, 1227, 1263
Proposed Standards Updates, 55n. 15, 58n. 17, 790n. 15
and qualitative characteristics of accounting information, 45–46
and revenue recognition, 1042
and securities, 884n. 1
Standards of. See also Statements of Financial Accounting Standards
and statement of cash flows, 1482
and technical accounting issues, 1519
on uncertain tax positions, 1143
Financial assets, IFRS and, 1027–1028
Financial components approach, 368
Financial crisis, 370n. 14, 1189
Financial engineering, 785n. 14
Financial Executives Institute, 39
Financial flexibility, 214, 229, 234
Financial forecasts, 1513–1516
Financial income, 1118, 1127–1130
Financial information, types of, 1488
Financial instruments, 238, 884n. 1, 975–976. See also specific instruments
Financial liquidity, 234
Financial markets, 31
Financial position, statement of, 877. See also Balance sheet(s)
Financial projections, 1513–1516
Financial reporting, 4. See also Reporting
accuracy of, 2
ethics in, 21
and expectations gap, 18
general-purpose, 45
of international accounting standards, 20
and politically-influenced standard setting, 16–17
Financial statement(s), 4. See also specific types of statements
correcting errors on, 1361–1363
with error corrections, 1373–1374
general-purpose, 7
installment-sales transactions presentation, 1075–1077
interest rate swap presentation, 994–995
in interperiod tax allocation (example), 1150–1151, 1153–1154
inventory accounting for, 478n. 2
maintaining monthly vs. quarterly, 117
management's responsibilities for, 1512–1513
for merchandising company, 114–117
notes to, see Notes to the financial statements
and ownership structure, 88–89
pension plan reporting in, see Pension plan reporting
percentage-of-completion presentation, 1061–1063
timeliness of, 19
worksheet preparation of, 130
Financial statement analysis, 1522–1528
comparative analysis, 1526
percentage analysis, 1527–1528
Financing activities, 229, 231, 1412, 1414
extraordinary items, 1437
on statement of cash flows, 1480, 1481–1482
Financing agreement, 706
Finished goods inventory, 416
Firm (as concept), 484n. 8
“Firm” contractual rights and obligations, 1274
Firm purchase commitments, 484n. 8
First Chicago, 1307
First-in, first-out (FIFO), 51
accounting for, 474
for assigning investment costs, 962n. 6
and cost flow assumption, 430–431
Fisher, D., 1411
Fixed percentage of book value method (declining balance), 595
Fixed-rate mortgage, 782
Fleming, Sir Alexander, 656n. 4
Flexibility, financial, 214, 229, 234
Float, collection, 376
Floating-rate mortgage, 782
f.o.b. (free on board) destination, 421
Footstar, 176
Ford Motor Company, 4, 18, 51, 54, 160, 236, 239–240, 366, 416, 450, 600n. 8, 714, 715, 821, 822, 836, 891, 1219, 1284, 1344, 1439
Foreign companies, SOX compliance by, 154
Foreign Corrupt Practices Act, 82
Foreign currency hedging, 984n. 23
Fortune Brands, Inc., 495
Foster, Taylor W., III, 842n. 16, 845n. 18
401(k) plan, 1185
Forward-looking information, 19
Fox (network), 656
Fox, J., 1140
Framework for the Preparation and Presentation of Financial Statements, 34
Franchise(s), 655–656, 1081–1084
Franchise agreement, 1082
Franchise fees, continuing, 1083
Franchisor's cost, 1084
Fraud, check, 378n. 17
Fraudulent financial reporting, 1517–1520
accounting errors vs., 1494
National Commission on, 1494n. 6
Free on board (f.o.b.) destination, 421
Freight costs, 493
Frequent-flyer programs, 722
Frito Lay, 45
Fruehauf, 1488
Fujitsu Limited, 588
Full-cost concept, 608
Full-costing approach, 540
Full disclosure in financial reporting, 1487–1520
of auditor's reports, 1508–1511
criteria for accounting/reporting choices in, 1520
current reporting issues with, 1513–1520
and differential disclosure, 1489–1490
of diversified companies, 1497–1501
on financial forecasts/projections, 1513–1516
and fraudulent reporting, 1517–1520
increase in reporting requirements, 1489
of management's reports, 1511–1513
and notes to financial statements, 1491–1493
of post-balance-sheet events, 1495–1496
of special transactions/events, 1493–1495
and stock markets, 1511
Full disclosure principle, 60–61
Functional expense classification, 164
Function-of-expense method, 207
Fund (term), 1184n. 1
Funds from operations (FFO), 597n. 7
Fuqua Industries, 441
F.U.T.A. (Federal Unemployment Tax Act), 711
Future deductible amounts, 1123–1126
Future tax consequences, 1144
Future tax savings, 1134
of an ordinary annuity of 1 (table), 291
computing for unknown, 294
of ordinary annuity, 300–302, 304–306
as variable in compound interest, 294
G
GAAP, see Generally accepted accounting principles
Gains:
adjustment to net income for, 1435–1436
defined, 53
from discontinued operations, 172–173
on financial statements, 163
on income statements, 164
on pension plans, 1197–1202, 1260
and postretirement expense, 1221, 1223
smoothing unexpected, 1260
Gains trading, 969
The Gap, Inc., 493, 506, 650, 709, 1270
Gap fillers, 658
GASB (Governmental Accounting Standards Board), 1227
Gates, Bill, 895n. 10
Gateway, 1489
GE, see General Electric
Genentech, 649
General checking account, 377
General Electric (GE), 32, 48, 68, 160, 170, 349, 358, 670, 707, 765, 766, 821, 822, 897, 899, 979, 984, 1140, 1217, 1219, 1248, 1497
General Electric Capital Corp., 707
General Electric Credit, 1307
General expenses, 164
General Foods, 1504
General indexes, 438n. 8
Generally accepted accounting principles (GAAP), 7, 13–16
accounting changes and error analysis, 1404–1406
and actual interest capitalization, 542
balance sheet and statement of cash flows, 277–278
“big GAAP versus little GAAP” issue, 1490, 1550n. 29
codification of, 22
comparability of changes, 51n. 9
convergence of IFRS and, 156, 1554
development costs, 1520
disclosure requirements, 1548–1549, 1550n. 29
earnings per share disclosures, 910n. 20
and fair value, 56–58, 989n. 32
hierarchy, 14n. 6
and historical cost, 56
and IFRS, 31, 205–206, 243, 278, 408–409, 525, 693–694, 700, 753–754, 815, 874–875, 942, 1026–1027, 1109–1110, 1175, 1250–1251, 1346n. 1, 1404–1405, 1480–1481, 1549
income tax reporting, 1175
intangible assets and impairments, 693–694
inventory accounting, 525
lease accounting, 1331–1332, 1337, 1339
major sources of, 13
for offsetting, 243
and OPEBs, 1189n. 8
organizations settings standards for, 7–13
pensions and postretirement benefits, 1250–1251
recovery of impairment loss, 410
and Regulation G, 61
and revaluation equity, 281
revenue recognition, 1042, 1109–1110
share-based compensation, 892
share issuances accounting, 875
statement of cash flows, 1480–1481
stock-based compensation plans, 910n. 20
straight-line method, 815
transaction analysis under, 153
using judgment in applying, 14
and variable interest entities, 996–999
General Motors (GM), 32, 49, 51, 54, 539, 600n. 8, 817, 840, 899, 911, 1184, 1219, 1439
General-purpose financial reporting, 45
General-purpose financial statements, 5
General Tire and Rubber, 443n. 14
Georgia-Pacific, 214, 484, 561
Gerth, J., 607
GHGs (greenhouse gases), 730–731
Gibson, Richard, 1282
Gift cards, 1045
Gilbert, D., 1419
GlaxoSmithKline plc, 666
Glencore International, 32
GM, see General Motors
Going concern assumption, 55
Going concern concept, 1509
Golf Digest, 708
impairment of, 663–665, 696–697
as write-off, 661
Goodyear Tire and Rubber, 590, 776, 1138
Google, 52, 117, 650, 670, 822, 836, 977–978, 1140
Gore, Richard, 597n. 7
Gotham Utility Company, 713
Governmental Accounting Standards Board (GASB), 1227
Government grant approach, 731
Granof, Michael H., 443n. 15, 445n. 20
Grant date, 893
The Great Atlantic & Pacific Tea Company, 224–225
Greenhouse gases (GHGs), 730–731
Gross approach, 1251
Gross margin percentage, 486n. 11
Gross method of revenue recognition, 1051
Gross profit method (gross margin method), 485–488
Gross profit on selling price, 486–487
Gross profit percentage, 486–487
Group methods for depreciation, 595–597
Groupon, 5, 158, 159, 836, 911
Guarantees, 719–721, 729n. 21. See also Warranties
Guaranteed residual value, 1277, 1338
in capitalization of lease, 1303
in lessee accounting, 1291–1293
in lessor accounting, 1294–1295
for sales-type lease, 1297
Guerra, F., 1117
Gujarathi, Mahendra R., 484n. 8
H
H. J. Heinz Company, 1542
Half-year convention, 599, 615
Hall, Ben, 17
Halliburton Company, 223, 1067–1068, 1348
Halperin, Alex, 836
Hanna, D., 170n. 12
Harley-Davidson, Inc., 1494
Hayes, Randall, 437n. 7, 441n. 10
Healthcare benefits, 1217n. 20, 1218–1219
Held-for-collection classification, 1028
Held-to-maturity debt securities, 218, 953–955
Henry, David, 844
The Hershey Company, 5, 6, 444
Hertz, 1081
Hewitt, Conrad W., 3
Hewlett-Packard Company (HP), 372, 481n. 4, 670, 1184, 1287n. 11, 1301–1302, 1359, 1412
Hickok, Richard S., 1058n. 17
Hierarchy, 35
Historical cost, 56, 57, 78, 214, 638
Holiday Inn, 1081
The Home Depot, 54, 539, 1276, 1283, 1412, 1513
Homestake Mining Company, 1173
Homestore Inc., 1040
Honda, 51
Honeywell International, 1202
Horizontal percentage analysis, 1527
Horngren, C., 42n. 2
Host security, 989
HP, see Hewlett-Packard Company
H & R Block, 1081
HTC, 657
Hudson, M., 371
Huffy Corp., 790
Hurricanes, 1496n. 8
Hybrid methods for depreciation, 597
Hybrid plans, 1214n. 18
Hybrid securities, 989
Hypo Real Estate, 588
I
IAASB (International Auditing and Assurance Standards Board), 156
IASs, see International Accounting Standards
IASB, see International Accounting Standards Board
IASCF (International Accounting Standards Committee Foundation), 33
IBM Corporation, 4, 5, 20, 48, 160, 216, 245, 256, 416, 424, 670, 821, 1119n. 1, 1217, 1271, 1285, 1315, 1489
IBM Global Financing, 1271
IDEA (Interactive Data Electronic Applications), 1516
If-converted method, 905–906, 918–919
IFRIC (International Financial Reporting Interpretations Committee), 34–35
IFRIC No. 14, 1257n. 33
IFRS, see International Financial Reporting Standards
IGo Corp., 1040
Ijiri, Yuji, 484n. 8
ILFC (International Lease Finance Corp.), 1271, 1273–1278
Imhoff, Eugene A., Jr., 1525n. 28
Impaired note receivable, 364
of indefinite-life intangibles, 696
International Financial Reporting Standards for, 693–699
of limited-life tangibles, 695
recoverability tests for, 602, 662
and restructuring, 792n. 17
reversal of, 1519
risk of, 665
Impairment evaluation process, 409–410
Impairment loss, 382–383, 410, 603, 695–696
recovery of, 1036
Impairment test, 652
Implicit interest rate, 360–361, 1277–1278
Implicit rate, 1332, 1334, 1335
Imprest bank accounts, 377–378
Imprest system for petty cash, 377–378
Imputed interest rate, 363, 780
Inadequacy, 591
Incentives, monitoring, 1419
Income, defined, 79
Income approach, 549n. 5
Income available to common stockholders, 904
Income before taxes, see Pretax financial income
Income bonds, 765
Income statement(s), 85, 160–168
and accounting principle changes, 179–180
alternate terminology for, 160n. 1
and cash flows statement, 1416–1417, 1421, 1424, 1429
and changes in estimates, 180
columns on, 129
and comprehensive income, 182–186
and corrections of errors, 180–181
deferred tax reporting on, 1126–1127, 1141–1143
and discontinued operations, 170–173
and earnings per share, 177–179
example, 115
and extraordinary items, 173–176
and extraordinary losses, 175
illustration of, 1446
intermediate components of, 164–166
irregular items reported on, 168–179
and quality of earnings, 161–162
and retained earnings statement, 181–182
segmented, 1498
and unusual gains and losses, 169–170
Income statement (percentage-of-sales) approach, 356
Income statement method, see Direct method
Income tax(es):
deferred, adjustment to net income for, 1435
defined, 1145
as operating cash outflows, 1437
payable, in interperiod tax allocation (example), 1147–1154
on statement of cash flows, 1481–1482
Income taxes, accounting for, 1116–1145, 1434n. 6
accounting objectives, 1122–1123
asset-liability method, 1144
deferred taxes, 1119–1126, 1145
differences between pretax and taxable income, 1127–1130
and future deductible amounts, 1123–1126
and future taxable amounts, 1119–1123
on income statement, 164, 1126–1127, 1141–1143
interim reporting, 1505
interperiod tax allocation (example), 1147–1154
intraperiod tax allocation, 171–172
LIFO, 441n. 11
and net operating losses, 1132–1138
tax rate considerations in, 1130–1132
and uncertain tax positions, 1143–1144
Income tax benefit, 1145
Income taxes currently payable, 1145
Income tax expense, 1145
Income taxes refundable, 1145
Incorporation acts, 822
Increasing-charge method, of depreciation, 597
Incremental borrowing rate, 1277, 1279n. 6
Incremental direct costs, 1298–1299
Incremental method, 827, 889–890, 919–920
Indefinite-life intangibles, 652, 662–663, 696
Independent lessors, 1271
Independent third-party trustee, 1185
Indexes, computing, 438
Indirect effects (accounting changes), 1405–1406
Indirect method:
for accounts receivable (net), 1438
for determining net cash flow from operating activities, 1418–1419, 1428
special rules applying to, 1433–1434
Indirect verification, 51
Indy Mac Bank, 9
Inflation, monetary unit assumption and, 55
Inflows, cash, 1444
Information, financial, 1488
Information overload, 1488
Information technology, international accounting standards for, 31
ING Group, 32
Initial direct costs (lessor accounting), 1299
Initial franchise fee, 1082–1083
Initial operating-losses, 669
Inland Steel, 593
In-process research and development (IPR&D), 693–694
Input:
in depreciation, 593
measures of, 1058
Installment-sales accounting method, 1068–1077
Instruments, financial, see Financial instruments
In-substance defeasance, 775n. 7
Insurance, adjusting entries for, 99–100
Intangible assets, 648–653, 670–672. See also specific types, e.g.: Limited-life intangibles
on balance sheets, 222
characteristics of, 650
defined, 650
impairment of, 652, 662–664, 694
International Financial Reporting Standards for, 693–697
recognition of, 673
Integral approach, 1503, 1507, 1552
Integrated reports, 649
Intel, 31, 59, 102, 215, 256, 289, 480, 560, 670, 821, 997
Interactive Data Electronic Applications (IDEA), 1516
Interbrand Corp., 670
Interest. See also Compound interest
accruing with effective-interest method, 773
capitalization of, 426n. 3, 543–544
components of, 316
costs of, 426
as pension expense, 1191
as period cost, 426
as postretirement expense, 1220–1221
residual, 875
and time value concepts, 289–293
variables in computation of, 289
Interest-bearing notes, 359, 361–363, 703–704, 778–779
Interest costs, incurred during construction, 638
in capitalization of lease, 1303
computation of, 310
disclosure requirement, 289n. 2
imputed, 363
as variable in interest computation, 289
Interest rate risk, 984
Interest revenue, 352, 546–547
Interim period tax, 1505
continuing controversy about, 1507–1508
requirements for, 1503–1504, 1552–1554
Internal controls, 18, 154, 376
Internal direct costs, 1299
Internal environment, fraud and, 1518
Internal events, 91
Internal indexes, 438n. 8
Internally created goodwill, 659
Internally created intangibles, 650–651, 673
Internal Revenue Code, 1118–1119, 1145
Internal Revenue Service (IRS):
and indexes, 440n. 9
and LIFO conformity rule, 444
and purchases-only-approach, 501n. 16
International accounting convergence, see Convergence, of U.S. and international standards
International Accounting Standards (IASs), 20, 34
No. 1 (“Presentation of Financial Statements”), 408, 753, 874, 1404, 1554
No. 2 (“Inventories”), 525, 1519
No. 7 (“Cash Flow Statements”), 1480, 1481
No. 8 (“Accounting Policies, Changes in Accounting Estimates and Errors”), 1404, 1405, 1519
No. 10 (“Events after the Balance Sheet Date”), 1548
No. 12 (“Income Taxes”), 1175
No. 13, 1110
No. 17 (“Accounting and Leases”), 1285, 1332
No. 18 (“Revenue”), 525, 1042, 1109
No. 19 (“Employee Benefits”), 1250, 1253, 1257n. 33
No. 24 (“Related Party Disclosures”), 1548
No. 27 (“Consolidated and Separate Financial Statements”), 1026
No. 32 (“Financial Instruments: Presentation”), 874, 1251n. 28
No. 33 (“Earnings per Share”), 904, 941
No. 34 (“Interim Financial Reporting”), 1548
No. 36 (“Impairment of Assets”), 753, 1519
No. 37 (“Provisions, Contingent Liabilities, and Contingent Assets”), 753
No. 38 (“Intangible Assets”), 712, 1520
No. 39 (“Financial Instruments: Recognition and Measurement”), 408, 409, 874, 941, 995, 1026
No. 41 (“Agriculture”), 525
International Accounting Standards Board (IASB), 20, 31, 901, 904, 1346n. 1, 1517
classified financial statements, 278–280
contingent liabilities, 700–701
convergence, 1554
definition of entity, 54n. 13
development of standards, 81
disclosures effectiveness project of, 1490
and fair value, 788
and fair value accounting, 17
fair values, 969
on financial instruments, 975–976
financial statement presentation, 159, 179, 281–282, 411
and IFRIC, 35
key elements of financial statements, 153
lease accounting, 1274n. 2, 1283, 1303–1304, 1333, 1334, 1339
on lease accounting, 1303, 1304
liabilities, 818
on loan loss allowances, 374
on offsetting, 243
and postretirement benefits, 1263
provisions in, 716
receivables, 409
recognition of pension assets, 1257n. 33
revenue recognition, 1109–1110, 1113
as standard-setting organization, 32–33
in standard-setting structure, 33–34
statement of cash flows, 1482
technical accounting issues, 1519
International Accounting Standards Committee Foundation (IASCF), 33
International Auditing and Assurance Standards Board (IAASB), 156
International companies, 153
International Financial Reporting Interpretations Committee (IFRIC), 34–35
International Financial Reporting Standards (IFRS), 20, 1109–1113, 1346n. 1
No. 2 (“Share-Based Payment”), 941, 1250
No. 7 (“Financial Instruments: Disclosure”), 408
No. 8 (“Operating Segments”), 1548, 1549, 1554
No. 9 (“Financial Instruments”), 411, 950, 976, 1026
accounting by the lessee, 1332–1337
accounting by the lessor, 1337–1339
accounting changes and error analysis, 1404–1406
accounting for financial assets, 1027–1028
accounting for leases, 1331–1339
accounting for property, plant, and equipment, 637–638
accounting information system, 153–156
agricultural products, 482
balance sheet and statement of cash flows, 277–282
cash and cash equivalents, 1412
component depreciation, 638–639
and CPA exam, 10
disclosure requirements, 1548–1554
employee stock-purchase plans, 896
GAAP comparison to, 31, 205–206, 243, 278, 408–409, 525, 693–694, 700, 753–754, 815, 874–875, 942, 1026–1027, 1109–1110, 1175, 1250–1251, 1346n. 1, 1404–1405, 1480–1481, 1549
hierarchy of, 35
impairments, 693–699, 1035–1036
income taxes, 1145
income tax reporting, 1175–1178
long-term debt, 706
mineral products, 482
offsetting, 243
pensions and postretirement benefits, 1250–1263
recognizing impairments, 639–640
revenue recognition, 1042
reversal of impairment loss, 640–641
share-based compensation, 892
statement of cash flows, 1480–1482
technical accounting issues, 1519–1520
International GAAP (iGAAP), see Convergence, of U.S. and international standards
International Lease Finance Corp. (ILFC), 1271, 1273–1278
International Organization of Securities Commissions (IOSCO), 33
International Paper Co., 240, 600, 610–611, 911
International stock exchanges, 820
International Thoroughbred Breeders, 347
Internet:
annual reports published on, 19
full disclosure in financial reporting on, 1516–1517
Interperiod tax allocation, 1147–1154
Intraperiod tax allocation, 171–172
Intrinsic value, 981
Intuit Inc., 219
Inventory(-ies), 416–420. See also related headings, e.g.: Periodic inventory system
alternative method for estimating, 486n. 11
average days to sell, 496
basis of valuation of, 217
comparable information about, 472–473
defined, 416
estimating, using gross profit percentage, 486n. 11
gross profit method for, 485–488
International Financial Reporting Standards for, 525–532
land as, 539
at net realizable value, 481–482
obsolete, 495
pricing methods, 1553
purchases of, 441n. 10
slow moving, 495
valuation of, 420, 445–446, 481–485
as worksheet entry, 1447
Inventory cost flow, 417
Inventory errors, 423–425, 1360
Inventory methods, 420n. 1, 443n. 16
Inventory turnover, 496
Investing activities, 229, 231, 1412, 1414
extraordinary items, 1437
on statement of cash flows, 1480, 1481–1482
available-for-sale securities, 955–959, 962–964
equity method for accounting, 965–966
fair value controversy, 969
held-to-maturity securities, 953–955
holdings of less than 20%, 961–964
long-term, 221
by owners, 53
reclassification adjustments, 970–974
security, 952n. 1
stock, as worksheet entry, 1447
trading securities, 959–960, 964
transfers between categories, 974–975
variable-interest entities, 996–999
Investment carrying amount, 1377–1378
Investment in Debt Securities, 952–960
Investors Technical Advisory Committee (ITAC), 11n. 5
Involuntary conversion, 561
IOSCO (International Organization of Securities Commissions), 33
I.O.U.s, 346
iPhone, 654
IPR&D (in-process research and development), 693–694
Irregular items:
analyzing, 169
categories of, 169
and FASB, 168
IRS, see Internal Revenue Service
Issuance, accounting at time of, 943–944
Issue costs, 828
ITAC (Investors Technical Advisory Committee), 11n. 5
J
Jaenicke, Henry R., 1044n. 8
Jakab, S., 1051
Japan, 51
Japan Post Holdings, 32
Jet Blue Airways, 537
Jiambalvo, James, 1360n. 7
Jiffy Lube International, 1082n. 30
Jim Walter's Corporation, 546
Job Creation and Worker Assistance Act of 2002, 614n. 15
John Deere and Company, 203, 275, 366, 444, 1184
John Deere Credit, 366
Johnson, L. Todd, 972n. 11
Johnson, Todd, 41
Johnson & Johnson, 584–585, 611, 612, 666, 690–691, 768, 829, 979, 1501, 1502
JPMorgan Chase & Co., 49, 224, 822, 839, 1270
Judgments and estimates, 215
Junk bonds, 768