Addis Ababa University
College of Business and Economics (CoBE)
Department of Accounting and Finance
Course Outline
Course Code: AcFn 2081
Course Title: Intermediate Financial Accounting I
Credit/Contact Hours: 4/4
Prerequisite: AcFn1032
Degree Program: BA Degree in Accounting and Finance
Course Description
This course presupposes that the students are equipped with knowledge of basic Accounting
principles. In this course, emphasis is given on accounting theory of financial statements,
recognition criteria, measurement, also reporting requirements of the elements of financial
statements are covered. Treatment of income, expense and the current assets, namely, cash, and
receivables form the central objective of this course.
Course Objectives
The objective of the course is to ensure that students have developed a thorough knowledge and
understanding of accounting principles and concepts and can apply this grounding to the
situations that they will typically encounter in practical work situations.
On completion of this course, students should be able to:
Explain the IASB’s conceptual framework underlying financial reporting;
Demonstrate an awareness of the substance of and the standard-setting process for
international accounting standards;
Perform the accounting functions of analyzing, recording and reporting as accomplished by
the accounting cycle and the preparation of the primary financial statements
Apply professional judgment in analyzing accounting issues and recommending accounting
policies;
Demonstrate Performance Measurement and Reporting
Demonstrate the preparation of Statement of Financial Position and Statement of Cash Flows
Demonstrate the recognition, measurement, and reporting of cash and receivables; and
Explain incentives and ethical issues underlying accounting policy decision.
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Course Contents
1. Development of Accounting Standards and Professional Practice
1.1 The environment of financial accounting
1.2 The conceptual framework for financial reporting
1.3 Rationale for a Conceptual Framework
1.4 Development of the Conceptual Framework
1.5 Information Asymmetry Revisited
1.6 Objective of Financial Reporting
1.7 Qualitative Characteristics of Useful Information
1.7.1 Fundamental Qualitative Characteristics
1.7.2 Enhancing Qualitative Characteristics
1.8 Elements of Financial Statements
1.9 Foundational Principles
1.9.1 Recognition/ Derecognition
1.9.2 Measurement
1.9.2.1 Valuation Techniques
1.9.2.2 Value in Use Measurements
1.9.2.3 Measuring Fair Value
1.9.2.4 Present Value Concepts
1.9.2.5 Impairment
1.9.3 Presentation and Disclosure
1.10 Cash flows and income measurement
2. Summary of the Accounting Process
2.1 Accounting information system
2.2 Identifying and journalizing transactions and events
2.3 Posting transactions and events
2.4 Preparation of trial balance
2.5 Adjusting entries
2.6 Preparation of financial statements
2.7 Closing entries
2.8 Preparation of post-closing trial balance
2.9 Reversing entries
2.10 Worksheet for manufacturing enterprise
3. Performance Measurement and Reporting
3.1 Quality of Earnings/Information
3.2 The Statement of Income and the Statement of Comprehensive Income
3.3 Revenue Recognition
3.3.1 The Asset-Liability Approach to Revenue Recognition: The Five-Step Process
3.3.2 Accounting for long-term construction contracts
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3.3.3 Accounting for Insurance contracts
3.4 Discontinued Operations
3.4.1 Component of an Enterprise
3.4.2 Assets Held for Sale
3.4.3 Measurement and Presentation
3.4.4 Income tax allocation
3.4.5 Comprehensive income
3.5 The Statement of Retained Earnings and the Statement of Changes in Equity
3.6 Accounting Policies, Changes in Accounting Estimates and Errors
4. Statement of Financial Position and Statement of Cash Flows
4.1 Usefulness and limitations of statement of financial position
4.2 Classification in statement of financial position
4.3 Format of statement of financial position
4.4 Purpose of statement of cash flows
4.5 Content and format of statement of cash flows
4.6 Events after the reporting period
4.7 Principles and techniques of disclosure
5. Cash and Receivables
5.1 Cash and internal control
5.2 Reporting of Cash
5.3 Recognition and Measurement of Accounts Receivable
5.4 Impairment of Accounts Receivable
5.5 Recognition and Measurement of Short-Term and Long-Term Notes and Loans Receivable
5.6 Derecognition of Receivables
5.6.1 Secured Borrowings
5.6.2 Sales of Receivables
5.7 Presentation and Disclosure
Teaching & Learning Methods/Strategy
The teaching and learning methodology include lecturing, discussions, problem solving, and
analysis. Take-home assignment will be given at the end of each chapter for submission
within a week. Solution to the assignments will be given once assignments are collected.
Cases with local relevance will also be given for each chapter for group of students to
present in a classr o o m . The full and active participation of students is highly encouraged.
Assessment Scheme
This is a summary of the assessment in the course.
Assessment task Weighting
1. Tests 30%
2. Quiz 10%
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3. Assignment 10%
4. Final Exam 50%
Total 100%
Roles of the Instructor
He/she will come to the class regularly on time and deliver the lecture in a well-organized
manner. Besides, at the end of each class he/she gives reading assignment for the next
class. He/she will make sure that proper assessments are given. He/she is also responsible to
give feedback for each assessment.
Roles of the Students
The success of this course depends on the students’ individual and collective contribution to the
class discussions. Students are expected to participate voluntarily, or will be called upon,
to contribute to set exercises and problems. Students are also expected to read the
assigned readings and prepare the cases before each class so that they could contribute
effectively to class discussions. Students must attempt assignments by their own.
Proficiency in this course comes from individual knowledge and understanding. Copying the
works of others is considered as serious offence and leads to disciplinary actions.
Text Book
Kieso, Weygandt and Warfield IFRS 2nd Edition, Vol. 1 & 2, Pearson Education-Prentice Hall.
Reference Books
Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield,, Intermediate Accounting, Volume
1& 2, 12th Canadian Edition
Alan Melville (2019). International Financial Reporting, A Practical Guide, Seventh edition
Pearson Education Limited.
A.N. Mosich, E. John Larsen (1989), Intermediate Accounting, 6th ed.
Gordon, Elizabeth A., Raedy, Jana Smith, and Sannella, Alexander John (2019). Intermediate
Accounting. Second Edition. Pearson Education, Inc.
Kieso D.E., Weygandt J.J. and Warfield T.D. (2012). Intermediate Accounting, 14th Ed. John
Wiley & Sons, Inc.
Kieso D.E., Weygandt J.J., Warfield T.D., Wiecek I.M., and McConomy B.J. (2019). Twelfth
Canadian Edition. Vol. 1. John Wiley & Sons Canada, Ltd.
Kieso D.E., Weygandt J.J., Warfield T.D., Wiecek I.M., and McConomy B.J. (2019). Twelfth
Canadian Edition. Vol. 2. John Wiley & Sons Canada, Ltd.
Nelson Lam and Peter Lau (2009). Intermediate Financial Reporting. An IFRS Perspective.
McGraw-Hill Education (Asia).
Nikolai, Bazley and Jones, Intermediate Accounting, (10th Ed. McGraw-Hill co.2007).
David Spiceland, Mark Nelson, Wayne Thomas and Jennifer Winchel 2023). Intermediate
Accounting, 11th Edition. McGraw Hill.
IFRS Blue Book, IFRS Green Book, IFRS Red Book (Latest editions)
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Commercial Code of Ethiopia
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