Advanced Accounting, 2nd ed.
by Halsey and Hopkins
Welcome to the second edition of Advanced Accounting. Our goal in writing this book was to satisfy the needs of today’s accounting students by providing the most contemporary, relevant, engaging, and student-oriented textbook available.
We think that we have accomplished that objective by maintaining a conceptually rigorous discussion of the material in an intuitive and student friendly style. Prior to writing this book, we both taught advanced financial accounting for many years, and we both felt that the structure and format of available textbooks contributed to the difficulties that our students have had in learning the material. several examples come to mind:
- Too many issues discussed simultaneously. Taken individually, consolidation issues can be difficult for students to grasp. The learning process is made all the more difficult when a particular topic (intercompany sales of assets, for example) is presented using alternative methods of equity investment accounting (e.g., full equity, partial equity, and cost) and under different business combination standards (e.g., pooling-of-interests, purchase method, and acquisition method). Our experience and the experience of many of our focus group participants—indicates that students are generally confused by the mixing of approaches and standards in the main-chapter discussion of most textbooks. To address this issue, we present all of our accounting topics using only the full-equity method of investment accounting and the current acquisition-accounting standard for business combinations. For instructors who wish to cover alternative equity-investment accounting approaches or business combination standards, we also provide appendices that include different methods by which the parent can account for the equity investment (e.g., cost method) and other currently relevant business combination standards (e.g., pooling-of-interest currently required for commonccontrol mergers).
- Mechanics versus intuition. After completing our courses and entering the working world, our former students have encountered many different consolidation approaches used by their employers and clients. Given the diversity of processes and procedures in practice, we adjusted our own teaching styles to emphasize an intuitive understanding of the concepts over the rote memorization of static journal-entry approaches. Unfortunately, the available textbooks were mostly written with a mechanical perspective. In writing this text, we incorporated our teaching-based observations. in each chapter, we initially focus on conceptual explanations and discuss mechanics only after we convey an intuitive perspective on each topic.
- Connection between fund-based statements and government-wide statements. Most texts combine, in a single chapter, fund-based accounting and government-wide financial statements, and do not demonstrate how government-wide statements are generated from fund-based accounting. We address this issue by covering these topics in two separate chapters, and by illustrating the process by which fund accounting is used to generate government-wide financial statements. We present this material within the context of an actual, small new england town. The town is large enough to demonstrate the accounting concepts, yet small enough to avoid obscuring the learning process with unnecessary complexity.
- Not writing for students. Many texts are written using overly technical language. Our text, while rigorous, is written in a student-friendly, conversational style that makes the material much easier for students to comprehend and apply.
This book is the product of extensive market research including focus groups, market surveys, class tests, manuscript reviews, and interviews with faculty from across the country. We are grateful for the feedback from faculty who reviewed, and students who studied, early drafts of our text.
Table of Contents
Advanced Accounting is intended for use in undergraduate and graduate accounting programs that include a course in advanced accounting as part of the curriculum. This book is especially written for advanced accounting courses in which an intuitive understanding of the material, in addition to accounting mechanics, is emphasized. Feedback from students who used our text, and subsequently completed the uniform CPA exam, has been extremely positive. They report that they felt well-prepared for the portions of the exam relating to advanced financial accounting topics.
The examples in this textbook reinforced well the theoretical concepts discussed in the chapters. The understanding I gained after using this textbook helped prepare me well for some of the toughest material in the CPA Exam.
Jon Slebodnick—Audit Associate, Deloitte
Emphasis on Intuition
We introduce topics by discussing the intuition behind accounting standards before discussing the mechanics of the accounting process. in addition, we intentionally deemphasize memorization of journal entry mechanics. We believe that this approach allows students to better understand the material and to develop relevant transferrable knowledge.
The advanced accounting textbook provided a clear and concise presentation of not only how certain accounting concepts are applied, but also why they are important and pertain to us directly.
Dan Brown—Audit Associate, PriceWaterhouseCoopers
Although our text emphasizes the intuition underlying the consolidation process, we also introduce the C-E-A-D-I (pronounced “seedy”) consolidation journal entry sequence to assist students in learning the mechanics of consolidation. The sequence systematically eliminates the book value of subsidiary equity (C, E), establishes the fair value adjustments for subsidiary net assets (A, D), and eliminates intercompany transactions and balances (I). Over the years, we’ve observed that this easy-to-remember mnemonic improves students’ understanding of consolidations and allows for easier recall of each step of the consolidation adjustment process.
FASB Codification Throughout
We wrote our text after implementation of the FASB’s Codification and we integrated the Codification throughout, including end-of-chapter problem assignments. Unlike many advanced accounting textbooks, we cite passages of the Codification frequently so that students can become familiar with the actual language of the standards, not just the authors' summary of the standards. This also allows students to easily find the relevant passages on their own. In addition, to familiarize students with the Codification search engine and to better develop their research skills, we also include numerous FASB Codification-related research assignments in our end-of-chapter problem sets.
Accounting students must become familiar with IFRS. Fortunately, the current accounting standards relating to the main topic of the book business combinations and consolidation were written jointly by the FASB and the IASB, and are 99% equivalent. In addition, other standards (e.g., segment reporting) are similar, but have key differences. In the text, we discuss the IFRS equivalent of accounting standards and highlight the differences between the two sets of accounting standards when they occur. These discussions are identified with the IFRS icon.
Relevance and Engagement
Advanced accounting is a challenging topic. We have adopted a number of techniques in our book to make the material relevant and engaging to students. These techniques include:
Focus Companies for Each Chapter
Each chapter incorporates a “focus company” for special emphasis and demonstration. We chose companies that illustrate the topic of the chapter so that students can learn the material within context. In addition, our chapters on governmental accounting are written around a small new england town that is large enough to effectively communicate the concepts of governmental accounting, yet small enough not to obscure those concepts in unnecessary complexity. The following are the focus companies we use to introduce our topics:
- Consolidation chapters
- AT&T, Cummins, American Apparel, Comcast-General Electric joint venture, Walt Disney
- Foreign currency, derivatives and consolidation of foreign subsidiaries
- Government and NFP
- Town of Acton, MA and the American Red Cross
- 3M Company
- Boardwalk Pipeline Partners, LLP
Real company Data in Text and Assignments
We believe that an important part of the learning process involves the application of concepts to realworld data. We include references to actual footnotes in the body of our text and also include a number of end-of-chapter problems that are written around actual footnote disclosures. These problems allow students to think about accounting concepts more broadly (i.e., less mechanically) and from the perspective of the users of financial statements. The following is a typical example:
Practice Insight Boxes
We provide a number of Practice insight Boxes resulting from interviews with practicing accountants and financial managers. These boxes provide students with insight into issues that accountants face in the real world, and with a glimpse into the types of decisions that practicing accountants must make. The following is a typical example:
Mid-Chapter and Chapter-End Reviews
Advanced accounting concepts can be challenging. To reinforce concepts presented in each chapter and to ensure student comprehension, we include topic reviews that require students to recall and apply the financial accounting techniques and concepts described in each chapter.
Our text is written with rigorous content, but in a student-friendly conversational style that facilitates the learning process. Previous textbooks by the authors have met with extremely positive reviews for writing quality, and students who have used our textbook comment on the relative ease with which they are able to assimilate the material.
This book was very engaging and simple to follow, which made for a more enjoyable class! The examples and exhibits do a great job supporting the text to better retain the information.
Moises Numa— Audit Associate, Deloitte
Prior to publishing the first edition of this text, we tested drafts of our text in our own courses for two years. As a result of feedback we received from our students at Babson College and Indiana University, we made substantive revisions to the text. We also received substantive input from many faculty members at other colleges and universities via in-depth reviews of preliminary drafts of our text and participation in focus groups. This edition of our text reflects substantial revisions that we made to reflect this input.
|Solutions Manual||Created by the authors, the Solutions Manual contains complete solutions to all the assignment material in the text.|
|PowerPoint||Created by the authors, the PowerPoint slides outline key elements of each chapter.|
|Test Bank||The test bank includes multiple-choice items, matching questions, short essay questions, and problems.|
|Excel Tempates||Excel Templates: We provide Excel spreadsheets for assignments. We have excel solution spreadsheets available for all of the consolidation-related problems and for problems in our government-wide financial statements chapter. These spreadsheets support the preparation of financial statements from a trial balance and related journal entries.|
|myBusinessCourse||A web-based learning and assessment program intended to complement your textbook and classroom instruction. This easy-to-use course management system grades homework automatically and provide students with additional help when you are not available. in addition, detailed diagnostic tools assess class and individual performance. myBusinessCourse is ideal for online courses or traditional face-to-face courses for which you want to offer students more resources to succeed. Assignments with the checkmark in the margin are available in myBusinessCourse.|
|Excel Templates||We provide Excel spreadsheets for all of the end-of-chapter problems that require significant data input. These spreadsheets will save students' time in data entry and allow them to dedicate additional time to learning the material. The Excel spreadsheets are identified by the Excel icon|
|myBusinessCourse||A web-based learning and assessment program intended to complement your textbook and faculty instruction. This easy-to-use program grades homework automatically and provides you with additional help when your instructor is not available. Assignments with the checkmark in the margin are available in myBusinessCourse. Access is free with new copies of this textbook (look for page containing the access code towards the front of the book) if you buy a used copy of the book, you can purchase access at www.mybusinesscourse.com.|
MyBusinessCourse is a web-based learning and assessment program that students and faculty can access anytime, anywhere, from most internet-enabled devices.
Whether being used as an Instructor Led or Student Self Study, myBusinessCourse offers excellent resources to help students.
- Guided Examples
- Homework Problems
- Computerized Test Bank
- Guided Examples