Syllabus
   INTERMEDIATE ACCOUNTING 2 - ACCT. 305
SPRING 2019
DR. KENNETH J. SMITH 

MONDAY AND WEDNESDAY
ACCT 305.001   3:00 - 4:15 PM  
ACCT 305.002  4:25 - 5:40 PM 

TEXTS: INTERMEDIATE ACCOUNTING, NNTH EDITION BY SPICELAND, NELSON, AND THOMAS (Required)

To Register for BAM Resources (Years 1 through 4 Aguamaint materials), go to http://salisbury.bamaccounting.com/.

This course will commence the Business Activity Model Simulation designed to extend the depth and breadth of our understanding of financial theory and practice.   We will examine in detail topics that are critical to the process of understanding, preparing, interpreting, and using financial statements that comply with generally accepted accounting principles (GAAP).  We will study and apply GAAP for income measurement, asset and liability valuation, and financial statement presentation, and the requisite processes involved therein.  Table 1 below outlines the Business Activity Model goals.

Students will again be assigned to teams of three to five individuals in which they will often work together both inside and outside of class to deal with the accounting issues under study and present their conclusions to the rest of the class.  Specifically, student teams work to correct financial statements of a fictitious company, and in doing so, learn about accounting for income taxes, accounting for leases and pensions, book and tax depreciation, debt amortization, segment reporting, and note disclosures.  Upon completion of the course, students should be able to read, understand, prepare, explain, and critically evaluate information contained in the financial statements of a small to medium sized company.  This approach should better prepare each student to take a leadership role in preparing, reading, understanding, explaining, and critically evaluating information contained in the financial statements of small to medium sized companies.  These skills are critical to succeeding in a number of professions including financial consulting, public accounting, information systems, banking and investment banking, and any other profession that involves financial statement analysis.

The objective of this course is to prepare students for careers in public and private accounting, financial consulting, management, and management advisory services.  Specifically, the goals are to: 1) promote technical competency; 2) advance critical thinking; 3) develop portable research skills; 4) develop oral and written communication skills; and, 5) motivate students for their chosen profession.   

Electronic Mail and the Internet:

This class will extensively use e-mail and the course home page to promote communication between the professor and the students and to facilitate the progression of the course. Students are encouraged to use e-mail to ask me questions that may arise concerning the subject matter of the course, particularly if they cannot meet with me during scheduled office hours and mutually convenience alternative hours cannot be scheduled.  

In order to ensure timely response to pressing questions, please go to Computer Services and obtain an e-mail account at your earliest convenience. If you need to contact me regarding anything you may contact me by e-mail at kjsmith@salisbury.edu.   I monitor my incoming messages seven days a week, so may feel free to send me a message any time, any day, with any questions that you may have.

Participation and Attendance Policy:

Extensive class participation in case discussion and presentation of answers to classroom exercises is required for successful completion of the course.  Class members must read all of the assigned exercises, problems, cases, and requirements and to prepare for class as requested. Please try to type your homework assignments and prepare duplicate copies as homework will be periodically collected in class.

At the instructor's discretion, students may be asked to present their material to the class for discussion.  A grade will be assigned to the participation based on the quality of the presentation.  Daily preparation is required as your participation grade will be significantly impacted by your performance during the discussions as either a presenter or as a member of the audience.

Insightful comments or questions that relate to class material will be rewarded with higher participation grades, lower grades will be assigned for simple clarification questions, and grade deductions will be charged to those who attempt to delay, confuse, or embarrass the professor.  Those who consistently participate will be assigned higher grades than those who participate on an infrequent basis.  

Unannounced quizzes will be factored into the calculation of the final course grade.  Attendance will also be factored into the final course grade. 

Regular class attendance is mandatory for successful assimilation of the subject matter presented in this course. Attendance will be checked daily. If you have fewer than three unexcused absences, you will be eligible for the curve that I put on each test.  If you have five to seven unexcused absences, you will lose the curve on all of the exams and be docked an additional letter grade in the course. A written doctor's note is required to obtain an excused absence. Assignments will be regularly checked with no submission of late papers allowed. In addition, no make-up examinations will be administered without a written doctor's note. It is strongly suggested that you obtain the telephone number of a classmate to promptly receive any missed assignments. If you are so inclined not to attend class regularly, I say to you: "GO AHEAD...MAKE MY SEMESTER!!"

Also, in accordance with the SU "Ghost Policy", if you miss the first two classes of the semester and fail to provide me with a legitimate reason for failing to attend class, you will be deregistered.

Qualifications and Conduct:

It is expected that students have a reasonable understanding of the material covered in principles of financial accounting.  Conduct and courtesy requirements are those expected of professionals in the actual business world.  Students will be required to sign a statement acknowledging their understanding of the requirements of this course and a willingness to abide by the university's academic integrity policy.

TABLE 1

Summary of Updates for Fall 2017:

1

Updated for ASC 842 on Leases (includes short-term leases, an operating lease, and a finance lease).

2

Updated for ASC 606 on Revenue Recognition--maintenance service contracts, deferred contract revenue, construction contracts, and disclosures.

3

Updated for ASU 2017-07  New disclosures for Defined Benefit Pension Plans--all Net Periodic Pension Benefit Costs other than Service Cost are classified as Other Expense on Income Statment.

4

Updated for ASU 2016-01 Unrealized market gains/losses on marketable equity securities go through Net Income while unrealized market gains/losses on AFS debt securities go to Accumulated OCI.

5

Updated for ASU 2015-17 Balance Sheet Classification of Deferred Taxes as noncurrent.

6

Updated for ASU 2015-11 Using LCNRV instead of LCM for Inventory Valuation.

7

Updated for SSARS 21 Accountants Review Report

Matrix of Topics Covered by Year of Aguamaint Case:

Year 1

Year 2

Year 3

Year 4

Accounting cycle: transactions, adjusting entries, trial balance

Continuation of Year 1 topics and activities, including all Accounting Cycle and Financial Statement items listed

Continuation of Years 1-2 topics and activities, including all Accounting Cycle and Financial Statement items listed

Continuation of Years 1-3 topics and activities, including all Accounting Cycle and Financial Statement items listed

Financial Statements: Balance Sheet, Statement of Comprehensive Income, Statement of Cash Flows (direct method), Statement of Changes in Owners' Equity

Allowance for doubtful accounts

Allowance for doubtful accounts and ADA/Receivables reasonableness test

Introduce merchandise inventory using the perpetual method and FIFO cost assumption; lower of cost or NRV and shrinkage calculations

Financial Statement Disclosure Notes

Deferred contract revenue

Introduce other comprehensive income

Warranty liability connected with merchandise inventory

Accrued revenues and expenses: trade receivables, supplies inventory, prepaid insurance, payables

Accrued expenses: interest and income tax payable

Purchase of marketable equity securities and treatment of market gain/loss

PPE: Purchase of land, warehouse, and equipment

Start-up costs and short-term leases

Operating Lease, updated for ASC 842

Purchase of AFS debt securities and related accumulated other comprehensive income issues

PPE: Repairs and maintenance versus capitalization of replacements

PPE: Equipment and straight line depreciation, License fee and amortization

Time Value of Money concepts applied to financing decision. Note Payable, complete with loan covenants and reclassification of short term portion

Finance Lease, updated for ASC 842

20% equity method investment in affiliate

Sale of Common Stock

PPE: Purchase of Vehicles and straight line depreciation

Repairs and maintenance versus capitalization of additions

Convertible bond issue including issue costs and amortization of premium

Net operating loss tax benefit and valuation allowance

Capitalization of interest on self-constructed assets

Defined benefit pension plan and related other comprehensive income issues

Segment reporting

Earnings per share calculations, including weighted average calculations

Deferred income taxes resulting from temporary book/tax differences involving  PPE, deferrals, and accruals

Advanced temporary book/tax differences and permanent difference effects on tax provision

Advanced temporary book/tax differences and permanent difference effects on tax provision

Ratio analysis for discussion, including major customer calculation

Ratio analysis to determine loan covenant compliance

Ratio analysis to determine loan covenant compliance

Ratio analysis to determine loan and bond covenant compliance

Engagement Letter and Client Confidentiality documents

Ethical issue: Controversy with client over treatment of allowance for doubtful accounts and unearned revenues

Ethical issue: Suggestion of putting officer spouse on payroll

Diluted earnings per share calculations due to convertible bond issue

Research the requirements of the Review process to write the Accountant's Review Letter, updated for SSARS 21

New footnote disclosures

New footnote disclosures

Change to Audit letter from Review and new footnote disclosures

Class Schedule 

Grading

Contact Information

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