Lahore University of Management Sciences

ACCT 221 – Corporate Financial Reporting

Fall Semester 2016

Instructors Atifa Dar / Waqar Ali

Room No. 416 / 422
Office Hours TBA
Email [email protected] / [email protected]
Telephone 042-3560-8394
Secretary/TA Secretary: Kashif Saeed / Ahmad Ali TA: TBA
TA Office Hours TBA
Course URL (if any) suraj.lums.edu.pk/~ro/

COURSE BASICS
Credit Hours 3
Lecture(s) 2 Duration 75 minutes
Recitation/Lab (per week) On need basis Duration On need basis
Tutorial (per week) On need basis Duration On need basis

COURSE DISTRIBUTION
Core Core
Elective
Open for Student Category
Close for Student Category

COURSE DESCRIPTION

The course builds on your knowledge of accounting theory and techniques as used to record, process, and report financial
information. While some emphasis is placed on analysis, interpretation, and use of accounting data for investing, credit, and
management decisions, the reporting function of accounting to external users (investors and creditors) will be stressed.

Current financial reporting and disclosure requirements, plus controversial and emerging practices, will be discussed in class. The
course will examine asset and income determination, preparation and interpretation of financial statements, and related disclosure
requirements. Please note that this course is a building block for the financial reporting issues encountered in the daily professional
life.

COURSE PREREQUISITE(S)

 ACCT 100 Principles of Financial Accounting

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COURSE OBJECTIVES & LEARNING OUTCOMES

Upon successful completion of the course, students should be able to:

1. Demonstrate understanding of the fundamental concepts, mainstream theories, international accounting
standards and practices in financial reporting;
2. Identify financial reporting issues faced by investors in analyzing different companies based on financial reporting
standards;
3. Apply financial reporting requirements to ascertain financial position, financial performance and cash flows of
companies of diverse nature.
4. Discuss and debate a variety of topics in emerging areas of accounting and their relevance to business financial
decisions including the ethical and global perspectives;
5. Present and defend their analysis and recommendations effectively, both in oral and written forms. (General
Learning Goal)

UNDERGRADUATE PROGRAM LEARNING GOALS & OBJECTIVES

General Learning Goals & Objectives
Goal 1 –Effective Written and Oral Communication
Objective: Students will demonstrate effective writing and oral communication skills
Goal 2 –Ethical Understanding and Reasoning
Objective: Students will demonstrate that they are able to identify and address ethical issues in an organizational
context.
Goal 3 – Analytical Thinking and Problem Solving Skills
Objective: Students will demonstrate that they are able to identify key problems and generate viable solutions.
Goal 4 – Application of Information Technology
Objective: Students will demonstrate that they are able to use current technologies in business and management
context.
Goal 5 – Teamwork in Diverse and Multicultural Environments
Objective: Students will demonstrate that they are able to work effectively in diverse environments.
Goal 6 – Understanding Organizational Ecosystems
Objective: Students will demonstrate that they have an understanding of Economic, Political, Regulatory, Legal,
Technological, and Social environment of organizations.

Major Specific Learning Goals & Objectives

Goal 7 (a) – Discipline Specific Knowledge and Understanding
Objective: Students will demonstrate knowledge of key business disciplines and how they interact including
application to real world situations (including subject knowledge).
Goal 7 (b) – Understanding the “science” behind the decision-making process (for MGS Majors)
Objective: Students will demonstrate ability to analyze a business problem, design and apply appropriate
decision-support tools, interpret results and make meaningful recommendations to support the decision-maker
Indicate below how the course learning objectives specifically relate to any program learning goals and objectives.

MAPPING OF OBJECTIVES
PROGRAM LEARNING GOALS COURSE LEARNING OBJECTIVES COURSE ASSESSMENT ITEM
AND OBJECTIVES
Goal 1 –Effective Written and Oral Students get a number of opportunities to CP, Quiz and Exam
Communication demonstrate their ability to communicate
effectively (CLO #5)

Goal 2 –Ethical Understanding and Ethical perspectives in some of the case studies CP, Quiz and Exam
Reasoning are highlighted (CLO #4)
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Goal 3 – Analytical Thinking and Major Goal: Analytical thinking and problem CP, Quiz, and Exam
Problem Solving Skills solving skills are essential for success in this
course (CLO #1-3)
Goal 4 – Application of Information Introduction and Use of e-learning software Assignments, Cases
Technology
Goal 5 – Teamwork in Diverse and Discussion and debate thereon of diverse topics in CP
Multicultural Environments classroom will allow this objective to be met.
Goal 6 – Understanding Develop students understanding of the CP, Quiz and Exam
Organizational Ecosystems interaction of firm specific variables with the
securities markets, industry, and the economy
(CLO #4)
Goal 7 (a) – Discipline Specific Major Goal: Comprehensive coverage of topics in CP, Quiz and Exam
Knowledge and Understanding CFR (CLO #1-5)
(Subject Knowledge)
Goal 7 (b) – Understanding the N/A N/A
“science” behind the decision-
making process

GRADING BREAKUP AND POLICY

Class Participation & Attendance: 7%

Quizzes: 30%
Midterm: 30%
Group Presentation: 3%
Final Examination: 30%

Course Instructions:
Quizzes will be announced and there will be no makeup quizzes. If you miss more than 5 classes you will automatically get an F
grade in the course. You are expected to be punctual and seated before the class starts. A zero minute policy holds and late arrival
will mean zero class participation for that session. It is important to note that the course structure is integrated and missing a class
will have a negative impact on understanding of concepts and performance.

EXAMINATION DETAIL
Yes/No: Yes
Combine/Separate: TBA
Quizzes Duration: TBA
Preferred Date: TBA
Exam Specifications: TBA

Yes/No: Yes
Combine/Separate: TBA
Midterm Exam Duration: TBA
Preferred Date: TBA
Exam Specifications: TBA

Yes/No: Yes
Final Exam Combine Separate: TBA
Duration: TBA
Exam Specifications: TBA
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Lectures Chapter: Title / Topic / IAS or IFRS SESSION OBJECTIVES
1-2 Chapter 2: 1. Describe the usefulness of a conceptual framework.
Conceptual Framework for Financial 2. Describe efforts to construct a conceptual framework.
Reporting / IAS 1 3. Understand the objective of financial reporting.
4. Identify the qualitative characteristics of accounting information.
5. Define the basic elements of financial statements.
6. Describe the basic assumptions of accounting.
7. Explain the application of the basic principles of accounting.
8. Describe the impact that the cost constraint has on reporting
accounting information.

3-4 Chapter 10: Acquisition and Disposal 1. Describe property, plant, and equipment.
PPE (incl. Borrowing Costs) / IAS 16, 2. Identify the costs to include in the initial valuation of property, plant,
23 & 40 and equipment.
3. Describe the accounting problems associated with self-constructed
assets.
4. Describe the accounting problems associated with interest
capitalization.
5. Understand accounting issues related to acquiring and valuing plant
assets.
6. Describe the accounting treatment for costs subsequent to acquisition.
7. Describe the accounting treatment for the disposal of property, plant,
and equipment.
8. Overview of investment properties and their accounting treatment.
9. Distinguish between investment properties and property, plant and
equipment.

5 Chapter 11: 1. Explain the concept of depreciation.

Depreciation, Impairment and 2. Identify the factors involved in the depreciation process.
Depletion / IAS 16, & 36 3. Compare activity, straight-line, and diminishing-charge methods of
depreciation.
4. Explain component depreciation.
5. Explain the accounting issues related to asset impairment.
6. Explain the accounting procedures for depletion of mineral resources.
7. Explain the accounting for revaluations.
8. Explain how to report and analyze property, plant, equipment, and
mineral resources.

6-7 Chapter 12: Intangible Assets / IAS 38 1. Describe the characteristics of intangible assets.
2. Identify the costs to include in the initial valuation of intangible assets.
3. Explain the procedure for amortizing intangible assets.
4. Describe the types of intangible assets.
5. Explain the accounting issues for recording goodwill.
6. Explain the accounting issues related to intangible asset impairments.
7. Identify the conceptual issues related to research and development
costs.
8. Describe the accounting for research and development and similar
costs.
9. Indicate the presentation of intangible assets and related items.
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8 Chapter 9: Inventories: Additional 1. Describe and apply the lower-of-cost-or- net realizable value rule.
Valuation Issues 2. Explain when company’s value inventories at net realizable value.
3. Explain when companies use the relative standalone sales value
method to value inventories.
4. Discuss accounting issues related to purchase commitments.
5. Determine ending inventory by applying the gross profit method.
6. Determine ending inventory by applying the retail inventory method.
7. Explain how to report and analyze inventory.
1. Understand revenue recognition issues.
2. Identify the five steps in the revenue recognition process.
9 - 11 Chapter 18: Revenue Recognition / 3. Identify the contract with customers.
IFRS 15 4. Identify the separate performance obligations in the contract.
5. Determine the transaction price.
6. Allocate the transaction price to the separate performance obligations.
7. Recognize revenue when the company satisfies its performance
obligation.
8. Identify other revenue recognition issues.
9. Describe presentation and disclosure regarding revenue.
*10. Apply the percentage-of-completion method for long-term contracts.
*11. Apply the cost-recovery method for long-term contracts.
*12. Identify the proper accounting for losses on long-term contracts.
*13. Explain revenue recognition for franchises.
12 - 13 Chapter 13: Current Liabilities, 1. Describe the nature, type, and valuation of current liabilities.
Provisions and Contingencies / IAS 37 2. Explain the classification issues of short-term debt expected to be
refinanced.
3. Identify types of employee-related liabilities.
4. Explain the accounting for different types of provisions.
5. Identify the criteria used to account for and disclose contingent
liabilities and assets.
6. Indicate how to present and analyze liability-related information.
14 Chapter 23: Statement of Cash Flows 1. Describe the purpose of the statement of cash flows.
2. Identify the major classifications of cash flows.
3. Prepare a statement of cash flows.
4. Differentiate between net income and net cash flow from operating
activities.
5. Determine net cash flows from investing and financing activities.
6. Identify sources of information for a statement of cash flows.
7. Contrast the direct and indirect methods of calculating net cash flow
from operating activities.
8. Discuss special problems in preparing a statement of cash flows.
9. Explain the use of a worksheet in preparing a statement of cash flows.
15 Midterm
16 - 17 Chapter 15: Equity (excl. Appendix) 1. Discuss the characteristics of the corporate form of organization.
2. Identify the key components of equity.
3. Explain the accounting procedures for issuing shares.
4. Describe the accounting for treasury shares.
5. Explain the accounting for and reporting of preference shares.
6. Describe the policies used in distributing dividends.
7. Identify the various forms of dividend distributions.
8. Explain the accounting for share dividends and share splits.
9. Indicate how to present and analyze equity.
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18 - 19 Chapter 17: Investments (excl. 1. Describe the accounting framework for financial assets.
Appendices) / IAS 32 & IFRS 9 2. Understand the accounting for debt investments at amortized cost.
3. Understand the accounting for debt investments at fair value.
4. Describe the accounting for the fair value option.
5. Understand the accounting for equity investments at fair value.
6. Explain the equity method of accounting and compare it to the fair
value method for equity investments.
7. Discuss the accounting for impairments of debt investments.
8. Describe the accounting for transfer of investments between
categories.
9. Explain who uses derivatives and why.

20 Chapter 22: Accounting Changes and 1. Identify the two types of accounting changes.
Error Analysis / IAS 8 2. Describe the accounting for changes in accounting policies.
3. Understand how to account for retrospective accounting changes.
4. Understand how to account for impracticable changes.
5. Describe the accounting for changes in estimates.
6. Describe the accounting for correction of errors.
7. Identify economic motives for changing accounting policies.
8. Analyze the effect of errors.

21 IAS 10 / Handout / Chapter 24: Events after the reporting date:

Presentation and Disclosure (excl. (i) Distinguish between and account for adjusting / non-adjusting events
Appendices) after the reporting date.
(ii) Identify items requiring separate disclosure, including their accounting
treatment and required disclosures.

22 IAS 34 / IFRS 5 / Handout / Chapter 1. The understanding of the need of interim financial statements.
24: (as above) 2. Specific implementation issues.
3. Describe the accounting problems associated with interim reporting.
4. Discuss the importance of identifying and reporting the results of
discontinued operations.
5. Define and account for non-current assets held for sale and
discontinued operations.
6. Indicate the circumstances where separate disclosure of material
items of income and expense is required.

23 IAS 24 / Handout / Chapter 24: (as 1. Discuss the disclosure requirements for related-party transactions.
above) 2. Indicate the effect that the related party relationship may have on the
separate and the consolidated financial statements.

24 - 26 Consolidation, Associates & Joint 1. Describe the concept of a group as a single economic unit.
Ventures / IFRS 3 & IAS 28 2. Explain and apply the definition of a subsidiary within relevant
accounting standards.
3. Identify and outline using accounting standards and other applicable
regulation the circumstances in which a group is required to prepare
consolidated financial statements.
4. Describe the circumstances when a group may claim exemption from
the preparation of consolidated financial statements.
5. Explain why directors may not wish to consolidate a subsidiary and
outline using accounting standards and other applicable regulation the
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circumstances where this is permitted.
6. Explain the need for using coterminous year ends and uniform
accounting polices when preparing consolidated financial statements.
7. Explain why it is necessary to eliminate intragroup transactions.

27 – 28 Group Presentations 1. Students will present to the class on reporting requirements around
one of the disclosure areas (financial statement items) covered above.
2. They would relate in their presentation these requirements to
extracts from the audited accounts of a business.
TEXTBOOK(S)/SUPPLEMENTARY READINGS
Recommended Textbook:
 Intermediate Accounting, 2nd edition, Kieso, Weygandt, Warfield.
Supplementary Material:
 IAS/IFRS Text
 Further material provided during course progress.