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COURSE TITLE: Advanced Financial Accounting
CREDIT WEIGHT AND WEEKLY TIME DISTRIBUTION: credits 3 (hrs lect 3 - hrs sem 0 - hrs lab 1)
CALENDAR DESCRIPTION: Complex areas of financial accounting including such things as business combinations, foreign currency translation and multinational operations, joint ventures, and not-for-profit organizations.

Prerequisites: BUSI 354
REQUIRED TEXTS:Hilton, Murray and Darrell Herauf, Modern Advanced Financial Accounting in Canada, 7 th  edition, 2013 McGraw Hill Ryerson
Midterm Exam (Chapters 1-6)30%
Final Exam (all chapters)40%
COURSE OBJECTIVES:Upon successful completion of this course, students will be able to:
  1. Understand and account for business combinations.
  2. Define and account for joint ventures. 
  3. Account for foreign currency translation, including transactions, financial statements of foreign currency operations and hedging instruments.
  4. Understand and account for non-profit organizations. 
  • Introduction, Syllabus
  • A Survey of International Accounting
  • Investments in Equity Securities
  • Business Combinations
  • Consolidation of Non-Wholly Owned Subsidiaries
  • Consolidation Subsequent to Acquisition Date
  • Intercompany Inventory and Land Profits
  • (A) Intercompany Profits in Depreciable Assets
  • (B) Intercompany Bond-holdings
  • Consolidated Cash Flows and Ownership Issues
  • Other Consolidation Reporting Issues
  • Foreign Currency Transactions
  • Translation and Consolidation of Foreign Operations
LEARNING OBJECTIVES:Detailed Learning Objectives (in preparation for CPA entrance requirements):
  • 1. Understand that account for business combinations:
    • describe investments in equity securities, business combinations and consult with dated financial statements, and generally explain how they are related.
    • List the various CICA hand book sections and IFRSs that relate to the subject of business combinations, investments in equity securities, and the preparation of consolidated financial statements.
  •  2. Identify and apply the appropriate method to account for nonstrategic and strategic investments.
    • Understand the conceptual basis for the classification of investments in equity securities.
    • list and briefly discuss the various types of investments in equity securities.
    • List and briefly discuss the various accounting methods that can be used to account for investments in equity securities.
    • Match and apply the variety of accounting methods that can be used depending on the classification of the investment in equity security (including cost, amortized cost, fair value through profit and loss and fair value through other comprehensive income).
    • Describe the impairment of significantly influenced companies.
    • Explain how to account for gains and losses on the sale of equity investments.
    • Understand the concept of differential reporting for investments in equity securities.
  •  3. Understand and apply the accounting procedures for business combinations, including intercompany transactions:
    • Define and give examples of a business combination and understand the various legal forms of business combinations.
    • Describe the tax considerations that apply to the various legal forms of business combinations.
    • Identify the generally accepted accounting method used to account for business combinations, and the available alternatives.
    • Understanding of the equity method and its application.
    • Account for the consolidation under the equity method both one year after the acquisition and in subsequent years; account for consolidation of non-wholly-owned subsidiaries; account for purchase discrepancies more than one year after acquisition.
    • account for the consolidation of full wholly owned subsidiaries and non-wholly-owned subsidiaries under the cost method.
    • Explain the concept of goodwill, its measurement, its impairment and its presentation and disclosure.
    • Understand the concept of negative goodwill on the rules governing it.
    • Understand the conceptual alternatives in the preparation of consolidated income statements.
    • Identify and classify the problems associated with consolidation procedures.
    • Understand the procedures of investment illumination, adjustments and eliminations of the various accounts to be included in the consolidated accounts including realized and unrealized profit from intracompany inventory sales, intracompany profit from sale of land, intracompany profit in amortizable assets, and other intracompany revenues and expenses.
    • Identified apply the procedures and converting from the cost method to the equity method.
    • Identify the basic concept behind unrealized intracompany profits and the types that exist.
    • Identify and explain the conceptual alternatives that exist in the consolidated income statement.
    • Prepare consolidated financial statements after taking into account the presence of unrealized intracompany profits.
    • summarize the difference between the recommendations and Canadian GAAP and IFRS in relation to intercompany profits.
    • account for increases in ownership interests.
    • Discuss and apply the accounting required one-step purchases are made and the impact on parent companies investment account.
    • Discuss how share purchases change the parent company’s level of influence.
    • Account for the decrease in ownership interest of the parent company when a sale of shares has been made and in situations where the parent company has not participated in the share issuance by the subsidiary company.
    • discuss the accounting for subsidiary company’s preferred shares in situations where the parent company holds and does not hold such shares. 
    • Discuss the implications and accounting required for indirect ownership of shares.
  •  4. Define and understand joint ventures and apply appropriate accounting methods.
    • Identify the differences between joint venture and other types of investments.
    • Define joint venture and explain the different forms of joint venture can take.
    • Describe the acceptable methods for accounting for interest in joint ventures.
    • Understand the accounting method is to use a joint venture accounting, when joint control ceases to exist.
    • Understand the concept of differential reporting as it applies to interest in joint ventures.
    • Describe I to account for non-cash capital contributions to joint ventures.
    • Describe in detail and apply the methods for dealing with transactions that occur between a venture and a joint venture.
    • discuss the mandatory disclosure requirements for the venturer in relation to its interests in joint ventures.
    • List and discuss the differences between the Canadian rules for accounting for joint ventures, and the corresponding international standards.
  •  5. Understand and apply the different accounting methods of translating foreign currency transactions, including hedging instruments.
    • Understand foreign exchange rate terminology.
    • Describe the spot or current exchange rate and the historic exchange rate.
    • List and discuss the different methods of translating foreign currency transactions.
    • Discuss and apply the temporal method of translating foreign currency transactions.
    • List and explain the recommendations from the CICA handbook for translating foreign currency transactions.
    • Understand what is referred to as exchange gains and losses and how they should be computed and recorded.
    • Identify the disclosure requirements with respect to foreign currency transactions.
    • Understand how to account for nonstrategic investments acquired in foreign jurisdictions.
    • Understand the concept behind hedging, the definition of hedging, and different hedging items.
    • Discuss the differences between an account for fair value hedges and cash flow hedges.
    • Summarize the difference between the recommendations and Canadian GAAP and IFRS in relation to hedge accounting.
  •  6. Understand and apply the appropriate method of translating foreign-currency operations and financial statements.
    • Understand the underlying accounting principles that govern the translation of foreign-currency financial statements.
    • Define and classify foreign operations, based on the Canadian approach outlined in the CICA handbook.
    • Outlined the different methods of translating financial statements and when to use each method.
    • Translate foreign currency denominated financial statements.
    • Understand what is referred to as exchange gains and losses, and how they should be computed and recorded.
    • Account for foreign currency translation in situations involving consolidations, including consolidation in which a purchase discrepancy existed.
    • Understand how to hedge a net investment in a self-sustaining foreign subsidiary.
    • Describe the disclosure requirements to be included in the translated financial statements.
    • Discuss segmented reporting and predictive ability.
    • Identify the differences that exist between the Canadian rules for translating financial statements and the corresponding International standard.
  • 7. Understand and apply the accounting required for not-for-profit organizations.
    • Define a not-for-profit organization and the CICA handbook sections that relate to not-for-profit organizations.
    • Explain and apply the concept of fund accounting and list typical funds generally used by not-for-profit organizations.
    • List, explain, and apply the revenue recognition alternatives applicable to not-for-profit organizations.
    • List and explain the financial statements required to be presented by not-for-profit organizations.
    • Understand how to account for capital assets owned by not-for-profit organizations.
    • Describe the reporting requirements of controlled and related not-for-profit organizations.
    • Outline the accounting requirements for financial instruments by not-for-profit organizations.
    • Define the following concepts: encumbrances system and budgetary control.
    • Prepare full sets of financial reports for not-for-profit organizations.
    • Discuss GAAP for public-sector organizations and financial reporting for government.

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