Lahore University of Management Sciences. ACCT 221 Corporate Financial Reporting Fall Semester 2015

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1 Instructor Room No. Office Hours Telephone Secretary/TA TA Office Hours Course URL (if any) ACCT 221 Corporate Financial Reporting Fall Semester 2015 Atifa Dar Suraj.lums.edu.pk COURSE BASICS Credit Hours 3 Lecture(s) Nbr of Lec(s) Per Week 2 Duration 1 hour 15 minutes Recitation/Lab (per week) Nbr of Lec(s) Per Week Duration Tutorial (per week) Nbr of Lec(s) Per Week Duration COURSE DISTRIBUTION Core Elective Open for Student Category Close for Student Category ACF Core COURSE DESCRIPTION The course builds on your knowledge of corporate 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) Principles of financial accounting COURSE LEARNING OUTCOMES (CLO) 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)

2 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 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/outcomes specifically relate to any program learning goals and objectives. PROGRAM LEARNING GOALS AND COURSE LEARNING OBJECTIVES COURSE ASSESSMENT ITEM 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 Reasoning Ethical perspectives in some of the case studies are highlighted (CLO #4) CP, Quiz and Exam Goal 3 Analytical Thinking and Problem Solving Skills Goal 4 Application of Information Technology Goal 5 Teamwork in Diverse and Multicultural Environments Goal 6 Understanding Organizational Ecosystems Goal 7 (a) Discipline Specific Knowledge and Understanding (Subject Knowledge) Goal 7 (b) Understanding the science behind the decision making process Major Goal: Analytical thinking and problem solving skills are essential for success in this course (CLO #1 3) Introduction and Use of e learning software, Discussion and debate thereon of diverse topics in classroom will allow this objective to be met. Develop students understanding of the interaction of firm specific variables with the securities markets, industry, and the economy (CLO #4) Major Goal: Comprehensive coverage of topics in Applied Corporate Finance (CLO #1 5) NA CP, Quiz, and Exam Assignments, Cases CP CP, Quiz and Exam CP, Quiz and Exam NA

3 GRADING BREAKUP AND POLICY Quiz(s): 30% Class Participation: 7% Attendance: 3% Midterm Examination: 30% Final Examination: 30% 100% There will be no makeup quizzes. If you miss more than 5 classes you will automatically get an F grade in the course. Develop critical thinking skills by completing research tasks, group learning and interaction tasks, and written and oral communication tasks. Critical thinking is a rational response to questions that cannot be answered definitively and for which all the relevant information may not be available. There will be a combination of announced and unannounced quizzes and the lowest scoring quiz will be dropped. There will be no makeup quizzes. If you miss more than 5 classes you will automatically get an F grade in the course. I expect you to be punctual and be in your seat before the class starts. Walk in after 5 minutes will be counted as a nonattendance and will lower your attendance grade. It is important to note that the course structure is integrated and one missed class may result in relatively pervasive impact on understanding of concepts. Examinations are demanding of both your efficiency and effectiveness in addressing accounting measurement, reporting, and analysis issues. EXAMINATION DETAIL Midterm Exam Yes/No: Yes Combine Separate: Combine Duration: 3 hours Preferred Date: Exam Specifications: Open IFRS text/ closed notes Final Exam Yes/No: Yes Combine Separate: Combine Duration: 3 hours Exam Specifications: Open IFRS text/ closed notes

4 COURSE OVERVIEW WEEK/ LECTURE/ MODULE TOPICS Lahore University of Management Sciences RECOMMENDED READINGS SESSION OBJECTIVES 1 2 Framework and IAS 1 IFFRS Text Describe what is meant by a conceptual framework of accounting. Discuss whether a conceptual framework is necessary and what an alternative system might be. Moreover a) Discuss what is meant by understandability in relation to the provision of financial information. b) Discuss what is meant by relevance and reliability and describe the qualities that enhance these characteristics. c) Discuss the importance of comparability to users of financial statements. 3 4 IAS 7 IFFRS Text Prepare, compare and interpret statement of cash flows 5 IAS 2 IFFRS Text Describe and apply the principles of inventory valuation. 6 7 IAS 16 plus Quiz IFFRS Text a) Define and compute the initial measurement of a noncurrent (including self constructed and borrowing costs) asset. b) Identify subsequent expenditure that may be capitalized, distinguishing between capital and revenue items. c) Discuss the requirements of relevant accounting standards in relation to the revaluation of non current assets. d) Account for revaluation and disposal gains and losses for non current assets. 8 9 IAS 38 IFFRS Text a) Discuss the nature and accounting treatment of internally generated and purchased intangibles. b) Distinguish between goodwill and other intangible assets. c) Describe the criteria for the initial recognition and measurement of intangible assets. d) Describe the subsequent accounting treatment, including the principle of impairment tests in relation to goodwill. e) Indicate why the value of purchase consideration for an investment may be less than the value of the acquired identifiable net assets and how the difference should be accounted for. f) Describe and apply the requirements of relevant accounting standards to research and development expenditure IAS 36 IFFRS Text a) Define an impairment loss. b) Identify the circumstances that may indicate impairments to assets. c) Describe what is meant by a cash generating unit. d) State the basis on which impairment losses

5 should be allocated, and allocate an impairment loss to the assets of a cash generating unit IAS 18 and 11 plus Quiz IFFRS Text a) Define a construction contract and discuss the role of accounting concepts in the recognition of profit. c) Describe the acceptable methods of determining the stage (percentage) of completion of a contract. d) Prepare financial statement extracts for construction contracts. Discuss revenue recognition issues; indicate when income and expense recognition should occur. 14 Mid Terms 15 IAS 40 IFFRS Text a) Discuss why the treatment of investment properties should differ from other properties. b) Apply the requirements of relevant accounting standards for investment property. 16 IAS 23 IFFRS Text Application of principles of capitalization of financial costs and debate on other alternatives 17 IFRS 5 IFFRS Text a) Discuss the importance of identifying and reporting the results of discontinued operations. b) Define and account for non current assets held for sale and discontinued operations. c) Indicate the circumstances where separate disclosure of material items of income and expense is required. (CLO 1) 18 IAS 10 IFFRS Text Events after the reporting date i) distinguish between and account for adjusting and nonadjusting events after the reporting date ii) Identify items requiring separate disclosure, including their accounting treatment and required disclosures IAS 37 IFFRS Text a) Explain why an accounting standard on provisions is necessary. b) Distinguish between legal and constructive obligations. c) State when provisions may and may not be made and demonstrate how they should be accounted for. d) Explain how provisions should be measured. e) Define contingent assets and liabilities and describe their accounting treatment. f) Identify and account for: i) warranties/guarantees ii) onerous contracts iii) environmental and similar provisions iv) Provisions for future repairs or refurbishments. 21 IAS 24 plus Quiz IFFRS Text Indicate the effect that the related party relationship may have on the separate and the consolidated financial

6 statements. 22 IAS 32, IFRS 9 IFFRS Text a) Explain the need for an accounting standard on financial instruments. b) Define financial instruments in terms of financial assets and financial liabilities. c) Indicate for the following categories of financial instruments how they should be measured and how any gains and losses from subsequent measurement should be treated in the financial statements: i) amortized cost ii) fair value ( including option to classify equity instruments through other comprehensive income) d) Distinguish between debt and equity capital. e) Apply the requirements of relevant accounting standards to the issue and finance costs of: i) equity ii) redeemable preference shares and debt instruments with no conversion rights (principle of amortized cost) iii) convertible debt 23 IAS 41 IFFRS Text Initial recognition, measurement and disposal of agricultural assets and their reporting (CLO 1) 24 IAS 34 IFFRS Text The understanding of the need of interim financial statements and its specific implementation issues Consolidation (IFRS 3,10,11,12) plus Quiz Advance Areas (IAS 12,17,19,21) Handouts will be provided IFFRS Text (CLO 1) a) Describe the concept of a group as a single economic unit. b) Explain and apply the definition of a subsidiary within relevant accounting standards. c) Identify and outline using accounting standards and other applicable regulation the circumstances in which a group is required to prepare consolidated financial statements. d) Describe the circumstances when a group may claim exemption from the preparation of consolidated financial statements.. e) Explain why directors may not wish to consolidate a subsidiary and outline using accounting standards and other applicable regulation the circumstances where this is permitted. f) Explain the need for using coterminous year ends and uniform accounting polices when preparing consolidated financial statements. g) Explain why it is necessary to eliminate intragroup transactions. Basic concepts of these topics will be discussed to expedite the learning curve when these topics are to be read at advance stage. (CLO 4)

7 TEXTBOOK(S)/SUPPLEMENTARY READINGS PWC Manual of Accounting; Delloite E Learning