Mensur Boydaş, Vahdi Boydaş: Accounting Principles: Index
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Mensur Boydaş, Vahdi Boydaş: Accounting Principles: Index

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Mensur Boydaş, Vahdi Boydaş: Accounting Principles: Mensur Boydaş, Vahdi Boydaş: Accounting Principles: Mensur Boydaş, Vahdi Boydaş: Accounting Principles:

Mensur Boydaş, Vahdi Boydaş: Accounting Principles: Mensur Boydaş, Vahdi Boydaş: Accounting Principles: Mensur Boydaş, Vahdi Boydaş: Accounting Principles:

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  • 1. I N D EX A. C. Nielsen Company, 657n.16 AASB (Australian Accounting Standards Board), 1360 Abbott Laboratories, 183, 873–874 Abdel-khalik, A. Rashad, 1129n.19 Abnormal shortages, 456 Abrams, J., 993n.1 Absences, compensated, 648–650 Accelerated Cost Recovery System (ACRS), 564 Accounting, ethics in, 19 Accounting changes. see Change(s) in accounting Accounting cycle, 73–98 adjusted trial balance, 90 adjusting entries, 81–82 closing, 92–94 journalizing, 75–76 post-closing trial balance, 94 posting, 76–80 preparing financial statements, 91–92 reversing entries, 95 steps of, 95 transactions and other events, identifying/ recording, 73–75 trial balance, 80–81 Accounting information system, 68–73 Accounting policies on balance sheets, 191, 192 disclosure of, 1316–1319 MD&A of, 1339–1340 Accounting principle, changes in. see Change(s) in accounting principle Accounting Principles Board (APB), 9, 24. See also Opinions of the Accounting Principles Board Accounting Research Bulletins, 9 Accounting Research Study No. 13 (“The Accounting Basis of Inventories”), 445n.5 Accounting standards economic consequences of, 17 need for development of, 7 politicization of, 24 Accounting Standards Board (AcSB) (Canada), 1360 Accounting Standards Board (ASB) (U.K), 1360 Accounting Standards Board of Japan (ASBJ), 1360 Accounting Standards Executive Committee (AcSEC), 12, 493n.2, 510n.11, 547n.6 Accounting theory, and cash basis accounting, 101–102 Accounts payable(s), 639 decrease in, 1257 increase in, 1254 indirect method of analyzing, 1251 Accounts receivable(s), 324 age of, 329n.7 days to collect, 344 decrease in, 1254 disposition of, 337–342 increase in, 1256 indirect method of analyzing, 1250 net, accounts receivable, 1267–1269, 1277 recognition of, 324–326 trade, 336 uncollectible, 326–331 valuation of, 326–331 Accounts receivable written off, 330–331 Accruals as class of adjusting entries, 81 in reversing entries illustration, 105–106 Accrual basis accounting cash basis accounting vs., 101–104 conversion to cash basis accounting, 103–104 for warranties, 655 Accrued expenses adjusting entries for, 87 as class of adjusting entries, 81 Accrued interest, adjusting entries for, 87–88 Accrued revenue(s) adjusting entries for, 86–87 as class of adjusting entries, 81 overstatement of, 1207 Accrued salaries, adjusting entries for, 88–89 Accrued wages, failure to record, 1206 Accumulated benefit obligation, 1053 Accumulated depreciation, 1255, 1257, 1279 Accumulated Depreciation account, 559 Accumulated other comprehensive loss, 765n.19 Accumulated postretirement benefit obligation (APBO), 1085–1089 Accumulated rights, 649 Acid-test ratio, 666 Acquisition costs, 507–511, 555 ACRS (Accelerated Cost Recovery System), 564 AcSB (Accounting Standards Board) (Canada), 1360 AcSEC. see Accounting Standards Executive Committee Activity method for depreciation, 543–544 Activity ratios, 208, 1350, 1351 Actually refinancing, 642 Actual return on plan assets, 1057, 1086 Actuarial present value, 1054n.7 Actuaries, 1053 Adaptec, 823 ADC Telecommunications, 321 Additions, 509 Additional paid-in capital, 746 Adelphia, 40, 709, 710, 1345 Adjunct account, 700 Adjustable-rate mortgage, 709 Adjusted trial balance, 69, 90, 94, 109–110 Adjustments, 81–90 for accruals, 86–90 for bad debts, 89–90 for deferrals, 82–86 defined, 68–69 for depreciation, 84–85 for insurance, 82–83 prior period, 147 for statement presentation, 85 types of, 81–82 for unearned revenues, 85–86 on worksheet, 108–109 Adjustments columns, 108 Administrative expenses, on income statement, 136 Adolph Coors Company, 662 Adverse opinion, 1338 Advertising costs, 607, 1331–1332 AES, 143, 688 After-closing trial balance, 69 Age of accounts receivables, 329n.7 AHold NV, 960 AICPA. see American Institute of Certified Public Accountants AICPA Special Committee on Financial Reporting on cost of business reporting, 1315 on forward-looking disclosures, 1342 on interim reporting, 1334 on off-balance-sheet accounting, 1320 on segment disclosure, 1328 on users’ changing needs, 1316 AICPA Task Force on LIFO Inventory Problems, 399n.5, 408n.15, 442n.1, 443n.3 AIG, 2, 5, 49, 337 Airline industry, 178, 541n.2 Air Products & Chemicals, 886n.12, 886n.12 Alaska Airlines, 1157 Alberto-Culver Company, 195, 764 Alcatel-Lucent, 488–489 Allied Products Corporation, 755 Allowance method, 327, 328, 442–443 Alltel Corp., 643 Almost Family, Inc., 89 Altera International, 872 Alternative minimum tax (AMT), 1005 Alterra Healthcare Corp., 181–182 Altman, E. I., 191 Amazon.com, 130, 178, 187, 259, 393, 596, 797, 811, 825, 861, 872 Ameren, 561 I-1 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 2. I-2 · Index American Airlines, 85, 644, 1094, 1158–1159, 1178 American Bar Association, 742 American Express, 338 American Home Mortgage Investment Corp., 931 American Institute of Certified Public Accountants (AICPA), 192. See also AICPA Special Committee on Financial Reporting; AICPA Task Force on LIFO Inventory Problems and Accounting Standards Executive Committee, 12–13 and APB, 9 Code of Professional Conduct, 13 and Committee on Accounting Procedure, 9, 24 and GAAP standards development, 9 and government intervention, 27 and SEC, 7 American Maize-Products Company, 399 America Online (AOL), 590 America West, 178 Ameritrade, 763 Ames Department Stores, 437 AM International, 391 Amortization of bonds, 289–290, 695–696, 1266–1267 corridor, 1064–1065, 1075–1076, 1088 defined, 540 effective-interest method, of bond, 289–290 of intangible assets, 591–593 of limited-life intangible assets, 1266 on postretirement benefit plans, 1088 of prior service costs, 1060–1061, 1086 straight-line, 1061 of trademark, 1279 on units-of-production basis, 596n.5 years-of-service, 1060–1061 Amortized cost, 859 Ampco-Pittsburgh Corporation, 546, 1196 AMT (alternative minimum tax), 1005 Anadarko Petroleum Corporation, 498, 904 Analogic Corporation, 616 Anheuser-Busch, 1352 Anixter Bros., Inc., 391 Annual interest rate, in compound interest tables, 268–269 Annualized approach, 1332 Annual reports, on World Wide Web, 5–6 Annuity(-ies), 286–288 Annuity due, 278–279, 286 future value of, 278–279 present value of, 283–286 Ante, S. E., 444 Antidilutive securities, 817, 819–821, 834n.21 APB. see Accounting Principles Board APBO. see Accumulated postretirement benefit obligation APB Opinions. see Opinions of the Accounting Principles Board Apple Computer, 323, 451, 593, 654 April-Marcus, Inc., 387 Arbitrageurs, 885 Arcady, A. T., 1078n.19 Arndt, M., 1005 AROs (asset retirement obligations), 659 Arrears, dividend in, 754 Artificial loss, 1158n.22 Artistic-related intangible assets, 594 ASB (Accounting Standards Board) (U.K), 1360 ASBJ (Accounting Standards Board of Japan), 1360 Assessments, 654–655 Asset(s) on balance sheet, 180 current assets, 181–184 depreciable base for, 540 gains/losses in (pensions), 1063–1064 held for disposal, 553 in lessee accounting, 1124 noncurrent, 184–186 pensions, 1063–1064 recognition of, 999 replacement of fixed, 549 sales price of, 1142 transfer of, 717 Asset expenditures, 508–509 Asset-linked bonds, 691 Asset retirement obligations (AROs), 659, 714 Asset reversions, 1078–1079 Asset turnover ratio, 560–561 Asset valuation, 507 Astra Zeneca Plc., 597 Atlantic Richfield, 558 AT&T, 74, 545, 615, 800–801, 1082 Attmore, R. H., 1091 Attribution period, 1084–1085 Auditing Standards Board, 13 Auditor’s report, 1335–1338 emphasis of matter in, 1337 and expectation gap, 1346n.26 on going concern of entity, 1337 and lack of consistency, 1337 and management’s responsibilities for financial statements, 1340n.18 qualified/adverse/disclaimer opinion, 1337–1338 standards for, 1335–1336 unqualified/clean opinion, 1337 Australian Accounting Standards Board (AASB), 1360 Available-for-sale securities, 152n.21, 182, 858, 861–865, 868–870, 873, 882 Average cost method, 460 for cost flow assumption, 395–396 for security purchases, 868n.6 Average days to sell inventory, 459 Avis, 962 Avon Products, 177, 323 Avon Rubber PLC., 174 Ayers, B., 996 Baan NV, 960 Badanhausen, K., 177 Bad debts adjusting entries for, 89–90 failure to adjust for, 1207–1208 Bahree, B., 557 Balance sheet(s), 69, 178–197 accounting policies on, 191 and cash flows statement, 1247–1248, 1253, 1256, 1260 classification in, 179–191 classified, 179 columns on, 110 comparative, 1275 contingencies on, 191, 192 contractual situations on, 191–193 current assets on, 181–184 debit vs. credit balances on, 1274 deferred tax reporting on, 1011–1013 elements of, 180 errors on, 1205–1208 events after preparation of, 1323–1324 example, 97 fair values on, 191, 193–194 format of, 189–191 under GAAP/iGAAP, 206 liabilities on, 180, 186–188 limitations of, 179 noncurrent assets on, 184–186 owner’s equity on, 189 presentation of, 154 stockholders’ equity on, 72, 765–766 usefulness of, 178–179 Balance sheet (percentage-of-receivables) approach, 328–330 Ball, J., 557 Banks as lessors, 1117, 1148n.17 treatment of purchases/sales of loans/securities by, 1246n.2 Bank, David, 645 Bank accounts, 347–348 Bank charges, reconciling, 349–352 Bank credits, reconciling, 350 Bank errors, reconciling, 350 Bankers Trust, 885 Bank of America, 67, 352, 759, 1115, 1119, 1157 BankOne, 5, 809, 811 Bank overdrafts, 322 Bank reconciliation, 349–352 Bankruptcies, of retailers, 437 Bankruptcy-prediction model, 191 Bank statements, 349 Bargain purchases, 964 Bargain purchase option, 1123, 1144 Bargain purchase option test, 1121–1122 Barnesandnoble.com, 596 Barrick Gold Corporation, 486 Barth, Mary, 802n.6 Barth Industries, 652 Basis Technology, 872 Basket purchase, 446 Bayer, 634 Bearer (coupon) bonds, 691 Bear Stearns & Co., 187 Beaver, W. H., 133n.3 Beck, Rachel, 751 Beckett, Paul, 352 Bed Bath & Beyond, 1129 Behn, Bruce K., 609n.16 BellSouth Corp., 691, 692 Benchmark, verifiable, 42 Benefits/years-of-service actuarial method, 1056, 1085n.26 Beresford, Dennis R., 877n.9 Berkshire Hathaway Inc., 1312 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 3. Index · I-3 Bernanke, Ben S., 291, 323 Bernard, Victor, 381 Beru AG Corporation, 636 Best Buy, 40, 55, 112, 326, 344, 385, 436, 452, 663, 666, 710–713, 767, 1182, 1336 Best Western, 962 Bethlehem Steel, 999, 1066, 1079 Bhamornsiri, Sak, 944n.18 Biddle, Gary C., 410n.22 “Big GAAP versus little GAAP,” 1316 Biggs, Stanley F., 448n.8 Black & Decker, 55 Blackman, Andrew, 768n.22 Bloomberg, 596 Bloomingdale’s, 452 Blow-out sales, 380 BLS (Bureau of Labor Statistics), 405n.10 Blumenstein, Rebecca, 508 BMC Industries, Inc., 652 Boeing Capital, 1117 Boeing Company, 84, 180, 382, 490, 508, 741, 1084, 1119, 1130 Boise Cascade, 447 Bonds. See also specific types, e.g.: Discount bonds accounting for, 702–703 corporate listings, 691–692 effective-interest method for, 697–700 and extinguishment of debt, 701–703 face value of, 692 and interest date, 694–696 between interest dates, issuance, 696 issuance of, 690, 700–701 monitoring investments in, 691–692 notes vs., 703 par on interest date, issuance at, 694–695 premium, 693 types of, 691 Bond amortization, effective-interest method of, 289–290 Bond covenants, 688–689 Bond discounts, amortization of, 1266–1267 Bondholders, 1349 Bond indenture, 691 Bonds payable, 690–703 and contra accounts, 700 decrease in, 1258 discount, 700 increase in, 1255 Bond premium(s) amortization of, 1266–1267 valuation of, 692–696 Bonus agreements, 650–651 Bonus payments, and change in accounting method, 1203 Book depreciation, tax depreciation vs., 566–567 Book of original entry, 69 Book value (bonds), 85, 697n.3 Book value method, 755 Book value per share, 768, 772–773 BOP Clothing Co., 686–687 Borrus, A., 694 Bradlees Stores, 437 Brand images, 608 Braniff, 178 Briggs & Stratton, 651, 724 Brinker International Inc., 1128 Bristol-Myers Squibb Company, 321 Broadcom, 823 Brokers, 1246n.2 Brown, K. L., 49, 938n.17 Brown, Robert Moren, 409n.20 Brown Group, Inc., 764 Brown Shoe Company, 399 Budge, Bruce P., 1272n.9 Buffet, Warren E., 1312 Building depreciation, 1254, 1279 Burden, 492 Bureau of Labor Statistics (BLS), 405n.10 Burger King, 962 Burton, John C., 8n.6 Business combinations, 590n.1 Business combinations, as present valuebased measurement, 265 Business-method patents, 596 Business organization. see Corporate form Buyback(s) in early 1990s, 749n.5 of outstanding stock, 756n.11 as sign to buy stock, 750–751 of treasury stock, 756n.11 Buyback agreements, 388, 935 Buybackletter.com, 750 Byrnes, Nanette, 1049, 1129 Byrnes, Tracey, 937 Cable and Wireless, 1150 Cablevision Systems, 744 Cadbury Schweppes, 1080 Calhoun, Charles H., III, 964n.31 Callable bonds, 691, 701n.8 Callable preferred stock, 755 Callaway Golf Co., 1162 Call option, 887 Call provisions, 689 Calpine, 688, 710 Campbell Soup Company, 570, 868–869, 1094, 1244 Canada, 1358–1360 Cannondale Corporation, 55 CAP. see Committee on Accounting Procedure Capettini, Robert, 505n.9 Capital allocation, 4 Capital assets errors, 1198 Capital expenditures, 508–509 Capitalization criteria avoiding, 1148–1149 for lessee, 1121–1124 for lessor, 1131 Capitalization period, 494 Capitalized lease accounting, 1118n.1, 1120–1124 bargain purchase option test in, 1121–1122 economic life test in, 1122 recovery of investment test in, 1122–1124 transfer of ownership test in, 1121 Capital leases, 1121–1124 Capital lease method, 1124–1129 Capital maintenance approach, 134n.5 Capital One Financial, 177 Capital stock, 742–743, 750 Capital structure, 1203 Capital structure ratios, 1350n.28 Captive leasing companies, 1117 Carcache, B., 564n.1, 1069, 1116 Carrybacks, 1006, 1018 Carryforwards, 1018. See also Loss carryforwards Carrying amounts, 994 Carrying value (bonds), 697n.3 Cash and cash equivalents, 181–182, 320–323, 1245n.1, 1269n.7 alternate terminology for, 320n.2 on balance sheets, 181–182 basis of valuation of, 181 determining change in, 1248, 1249, 1253, 1256 GAAP/iGAAP standards, 1283 internal control over, 347 from operating activities, 200 reporting, 320–322 restricted cash vs., 321–322 Cash balances, physical protection of, 349 Cash-balance pension plans, 1078n.19 Cash basis accounting and accounting theory, 101–102 accrual-basis accounting vs., 101–104 conversion to accrual basis, 103–104 financial statements, 101 modified cash basis, 102 of pension plan, 1055n.10 theoretical weaknesses of, 104–105 warranties, 655 Cash controls, 347–352 and bank balances reconciliation, 349–352 and imprest petty cash system, 348–349 and physical protection of cash balances, 349 using bank accounts, 347–348 Cash crunch, 203 Cash debt coverage ratio, 204 Cash deposits, returnable, 643–644 Cash discounts, 325–326, 392, 499 Cash dividends, 758–759 on common stock, 758n.12 on treasury stock, 759 Cash dividends payable, 1269 Cash flows, 7n.3 classification of, 1245 evaluating, 1246–1247 free, 204–205 net income vs., 203 Cash flow hedge, 893–894 Cash flow risk, 893 Cash flow statement. see Statement of cash flows Cash funds, 320 Cash over account, 348 Cash payments classes of, 1261 and direct method, 1263–1264 for income taxes, 1263 for operating expenses, 1262–1263 special rules applying to, 1265 to suppliers, 1262 Cash ratio, 323 Cash rebates, 657 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 4. I-4 · Index Cash receipts classes of, 1261 from customers, 1261–1262 and direct method, 1263–1264 special rules applying to, 1265 Cash-related items, 322–323 Caterpillar, Inc., 84, 382, 407, 604, 875, 886, 1117, 1325 Caterpillar Financial Services Corp., 1117, 1124–1127, 1130, 1132–1146 CBS, 750 CDs (certificates of deposit), 320n.1 Ceiling (upper), 439–440 Ceiling and Floor, 438–445 Cendant, 17 Century 21, 595 Certificates of deposit (CDs), 320n.1 Change(s) in accounting (general), 1182 guidelines for, 1201–1202 motivations for, 1203–1204 Change(s) in accounting estimate, 146, 148, 1195–1197, 1201 Change(s) in accounting principle, 148, 1182–1194, 1201 accounting for/reporting of, 1191–1192 direct/indirect effects of, 1193 disclosure of, 1320 and impracticability, 1193–1194 prospective reporting of, 1183 and retained earnings adjustment, 1192 retrospective, 1184–1190 Change in cash, determining, 1248, 1249, 1253, 1256 Change in reporting entity, 1197, 1201 Change-in-the-present-value method, 1145–1146 Channel stuffing, 936 Chase, 1117 Checks bouncing, 351–352 outstanding, 350 paper, 349n.16 postdated, 320 Check fraud, 349n.16 Checking accounts, 347–348 Cheney, Richard E., 1352n.29 Chesapeake Corporation, 192 ChevronTexaco, 558n.10 ChexSystems, 352 China Railway Construction Corp, 741 Choice Point, Inc., 904 Christie, Rebecca, 1316 Chrysler Corporation, 40, 409, 550n.8, 1184 Chrysler Financial, 1117 Ciba-Geigy, 433 Ciesielski, J., 204, 795, 804, 1055n.9 Cinergy, 811 Circuit City, 40, 326, 436, 457, 645, 666, 743, 1129, 1182 Cisco Systems, 47, 92, 133, 444, 593, 709, 885, 1271n.8 Citicapital, 1159 Citicorp, 145n.15 Cities Service Company, 665 Citigroup, 145n.15, 326, 608, 885, 904, 1117, 1130 CKE Restaurants Inc., 1128 Claims, 654–655, 1319–1320 Clarcor Inc., 649 Class B common stock, 744 Classified balance sheets, 179–180 Clean opinion. see Unqualified opinion Clorox Co., 759 Closing, 92–94 Closing entries, 69, 93–94, 98 Closing prices, 92–94 CNC (Conseil Nationale de la Comptabilité), 1360 Coach Inc., 1313 Coastal Corp., 1064 The Coca-Cola Company, 18, 20, 64, 81, 127, 172, 257–258, 377, 484–485, 584, 590, 597, 608, 632–633, 685, 738, 791, 809, 811, 852, 858, 870, 885, 890, 902, 927, 987, 1045, 1051, 1111, 1239, 1244, 1308–1309, 1356, 1377 “Cockroach theory,” 140 Code of Professional Conduct (AICPA), 13 “The codification,” 19 Cohen, A. J., 823, 1313 Collaterized receivables, 339n.11 Collection float, 347 Columbia Sportswear Company, 19, 619 Combination methods for depreciation, 547 Combined statement, 153 Comiskey, Eugene E., 1079n.20, 1273 Commercial paper, 320n.1 Commercial substance, 501–502 Commitments, disclosure of, 1320 Committee for Improvements in Financial Reporting (CIFR), 1181 Committee on Accounting Procedure (CAP), 9, 24, 761n.14 Commodity-backed bonds, 691 Common costs, 1328 Common-size analysis, 1354–1355 Common stock, 743. See also Preferred stock cash dividend paid for, 758n.12 change related to investment in, 1267 increase in, 1258 rate of return on, 767 in treasury at cost, 751n.7 as worksheet entry, 1280 Commonwealth Edison, 271, 738 Company names (intangible asset), 593 Compaq, 603 Comparative analysis, 1353 Comparative balance sheets, 1248, 1253, 1256, 1275 Comparative financial statements, correcting errors on, 1200–1201 Compensated absences, 648–650 Compensating balances, 321 Compensation plans, 796–811 convertible debt accounting, 797–798 convertible preferred stock, 798–799 debt and equity classifications of, 796 dilutive securities issuance in, 816n.14 effective, 803 and FASB, 796n.1 GAAP/iGAAP standards, 825 stock compensation plans, 803–811 stock warrants, 799–803 Competition, 1357 Completed-contract accounting method, 938, 943–944, 960 Completion-of-production basis, 948 Complex capital structure EPS, 816–822, 824 antidilution, 820–821 contingent issue agreement, 820 convertible securities—diluted EPS, 817–819 options and warrants—diluted EPS, 819–820 presentation and disclosure of, 821–822 simple vs., 812–813 Components, 141 Component depreciation, 547n.6 Composite depreciation rate, 546 Composite life, 546 Composite methods for depreciation, 545–547 Compounded continuously, 269n.4 Compounded daily, 269 Compound interest, 266–269 future value as variable in, 270 present value as variable in, 270 rate of interest as variable in, 270 and Social Security, 267 tables for, 267–269, 308–317 variables fundamental to, 270 Comprehensive dollar-value LIFO method, 402–403 Comprehensive income, 152–154, 877 combined statement of, 153 corrections of errors as, 154n.24 display requirements of, 153n.23 errors in, 1198 Computer Associates, 811 Computer software. see under Software Comserve, 620 Condensed income statements, 138–139 Conditional expenses, 651 Conglomerate (diversified) companies reporting, 1324–1329 ConocoPhillips, 749 Conseil Nationale de la Comptabilité (CNC), 1360 Consigned goods, 387–388, 965–966 Consignment shipment, 387 Consolidated Edison, 491 Consolidated financial statements, 871 Consolidated Natural Gas Company (CNG), 306 Consolidated Papers, Inc., 195 Consolidated statements of cash flows, 1265 Consolidations, 882, 1197 Continental Airlines, 178, 1157 Continental Trucking, 870 Contingencies, 651–662 on balance sheets, 191, 192 defined, 192 disclosure of, 1320 errors in, 1198 GAAP/iGAAP standards, 714 presentation of, 664–665 Contingent-fee-basis litigation, 1342n.21 Contingent liabilities. see Loss contingencies Contingent shares, 820 Continuing franchise fees, 964 Continuously compounded, 269n.4 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 5. Index · I-5 Contra accounts, and bonds payable, 700 Contract-related intangible assets, 595 Contractual situations, on balance sheets, 191–193 Contra items, 196 Contributions, accounting for, 506–507 Contributory pension plans, 1050 Control device, 453 Convenience financial statements, 1350 Convergence, of U.S. and international standards, 1183n.1, 1356–1360 accounting changes and errors, 1212 accounting information systems, 99 balance sheets, 206 cash and receivables, 345 conceptual framework for, 51 dilutive securities, 825 disclosure, 1347 earnings per share (EPS), 825 income statements, 155 income taxes, 1019 intangible assets, 612 international financial reporting, 20 inventories, 460 investments, 882 lease accounting, 1151 liabilities, 714 postretirement benefits, 1080 property, plant, and equipment, 562 revenue recognition, 960 statement of cash flows, 206, 1283 stockholders’ equity, 769 Convertible bonds, 691, 755, 796–797, 833 Convertible debt accounting, 797–798, 825 Convertible preferred stock, 755, 798–799, 833 Convertible securities, 817–819 Cookie jar reserves, 134 Coolidge, C., 1202 Coon, William R., 401n.8 Copyrights, 594 Corning, 823 Corporate bond listings, 691–692 Corporate capital, 744–753 Corporate form, 742–743 capital stock/share system, 742–743 and ownership interests, 743 state laws, 742 Corporate taxes, 646n.6. See also Income taxes, accounting for Corrections of errors as comprehensive income, 154n.24 GAAP/iGAAP standards, 1212 in income statement, 148 reporting, 1197–1201 Corridor amortization, 1064–1065, 1075–1076, 1088 Cost, 438 Cost allocation, 395n.4, 540–551. See also Depreciation Cost approach, 500n.4 Cost-benefit constraint, 1271 Cost flow assumption, 386 average cost method for, 395–396 and first-in, first-out, 396–397 identification, 394–395 and last-in, first-out, 397–398 Costs included in inventory, 386 period costs, 392 product costs, 391–392 and treatment of purchase discounts, 392–393 Cost method, 452, 751, 867n.5 Costs of financing, 392 Cost of goods available for sales or use, 386 Cost of goods sold, 386, 1142 multiple pools contributing to, 401n.8 in periodic inventory system, 384 section of income statement, 136 Cost per unit of product, 555–556 Cost-recovery accounting method, 956–958 Cost-to-cost basis, 939–941 Cost-to-retail ratio, 445 Coughlan, J. D., 541n.1 Counterbalancing errors, 1205–1207 Counterparty, 887n.16 Countrywide Financial Corp., 43, 343 Coupons, 657 Coupon bonds, 691 Coupon rate, 692 Coverage ratios, 208, 1350, 1351 CPC International, 329 Craig, Susanne, 865 Credits (Cr.), 69–71, 178 Credit balance, 69 Credit cards, 339n.12 Creditors, 203 disclosure of claims by, 1319–1320 short-term, 1349 Creditor calculations, 720–721 Credit quality, 694 Credit risk, 343n.14 Credit risk rate of interest, 291 Creswell, J., 143, 596 Crittenden, M., 319 Cron, William R., 406n.11 Cross-reference items, 196 CRS (FASB Codification Research System), 14 Cummins, C., 557 Cumulative catch-up, 942 Cumulative-effect approach, 1183 Cumulative preferred stock, 754 Current assets, 181–184 on balance sheets, 181–184 cash, 181–182 Current cash debt coverage ratio, 204 Current liability(-ies), 638–651. See also specific types, e.g.: Accounts payable(s) analysis of, 665–666 on balance sheets, 186–187 declared cash dividends as, 759 presentation of, 662–665 Current maturities of long-term debt, 641 Current operating performance approach, 141 Current ratios, 398, 665–666 Current receivables, 323 Current tax expense (benefit), 1018 Cushing, Barry E., 409n.19 Customary form, of balance sheets, 190n.11 Customer-related intangible assets, 593–594 CVS, 1129 Cycle, accounting. see Accounting cycle Daily compounding, 269 DaimlerChrysler, 20, 1117, 1184, 1266, 1356 Dairy Queen, 962 Dakdduk, Kenneth E., 1086n.27 Daley, Clayton C., Jr., 214, 215 Darden Restaurants Inc., 1128 Darlin, D., 1052n.4 Date of declaration (stock dividends), 758 Date of payment (stock dividends), 758 Date of record (stock dividends), 758 Days outstanding, 344 Days to collect accounts receivable, 344 Dead-weight debt, 702 Debenham, 451 Debenture bonds, 691 Debit balance, 69 Debits (Dr.), 69–71 Debt(s) compensation plans, 796 continuation of, 718–722 current maturities of, 641 dead-weight, 702 extinguishment of, 701–703 failure to adjust for bad, 1207–1208 issue cost (SFAS No. 6), 700n.5 long-term (see Long-term debt) settlement of, 717–718 Debtor accounting, 718n.15 Debtor calculations, 719–720 Debt ratings, 694 Debt-rating triggers, 1321 Debt to total assets ratio, 713 Debt triggers, 1321 Declaration, date of (stock dividends), 758 Declared cash dividends, 758 Declining-balance method, 545 Decreasing-charge methods for depreciation, 544–545 Deductible amounts, 994 Deductible temporary differences, 1001, 1018 Deep-discount bonds, 691 Defaults, 953–954 Deferrals, adjusting entries for, 82–86 Deferred annuities, 286–288 Deferred income taxes, 993–1000 changes in, 1267 and changes in tax rate, 1004–1005 Congressional acts affecting, 1005n.2 under GAAP and iGAAP, 1019 on income statements, 1000–1001 Deferred-payment contracts, 499–500 Deferred taxes, disclosure of, 1320 Deferred tax amounts, 993 Deferred tax assets, 993, 997–1000, 1018 asset recognition for, in company records, 999 recognized as loss carryforwards, 1008n.4 valuation allowance for, 999–1000 Deferred tax benefits, 997, 1018 Deferred tax consequences, 1018 Deferred tax expense, 995, 1018 Deferred tax liabilities, 993–995, 1018 in company assessments, 996 Congressional acts affecting, 1005n.2 and SFAS No. 6, 996 and SFAS No. 109, 996 Defined-benefit plans, 1051–1052, 1080 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 6. I-6 · Index Defined-contribution plans, 1051, 1080 DeFond, Mark L., 1198n.7 Dell Computer, 5, 179, 604, 884, 1122 Delphi Corp., 716, 1084 Delta Airlines, 85, 178, 885, 1016, 1114, 1115, 1119–1124, 1267 Deluxe Corp., 352 de Mesa Graziano, Cheryl, 931 Denny’s, 962 Depletion, 554–559 acquisition costs of, 555 defined, 540 development costs of, 555 exploration costs of, 555 issues in oil and gas industry, 557–559 and liquidating dividends, 557 and recoverable reserves, 556 restoration costs of, 555 Depletion base, 554–555 Deposits legally restricted, 322 in transit, 350 Deposit method, 958–959 Depositor errors, reconciling, 350 Depreciable base, for assets, 540 Depreciable tax life. see Recovery periods Depreciation, 540–551 Accumulated Depreciation account, 559 activity method for, 543–544 adjusting entries for, 84–85 and asset vs. liability accounting, 1124 changes in method of, 1196 decreasing-charge methods for, 544–545 defined, 540 factors involved in process of, 540 failure to record, 1207 GAAP/iGAAP standards, 562 group and composite methods for, 545–547 hybrid or combination methods for, 547 issues in airline industry, 541n.2 under partial periods, 548–549 post-September 11, 2001 measures, 564n.1 rate revision for, 550 and replacement of fixed assets, 549 straight-line method for, 543–544 tax methods for, 564–567 Depreciation expense, 1254, 1257 Derivatives, 884–900 basic accounting principles for, 886–889 cash flow hedge, 893–894 characteristics of, 889 disclosures for, 897 embedded, 895 and fair hedge value, 891–893 hedging, 890–894 SFAS No. 133, 900 Designated market value, 440 Detachable stock warrant, 800, 802 Development costs, 555 Devon Energy Corporation, 194 Dieter, Richard, 1148n.16 Differential disclosure, 1315–1316 Diluted earnings per share, 816–821 convertible securities, 817–819 factors in, 818–819 illustration of, 831–834 options and warrants, 819–820 reconciliation for basic and, 821 Dilutive securities, 796, 816 Diners Club, 338 Dingell, John, 27 Direct costs, incremental vs. internal, 1145 Direct-financing leases, 1131–1135 initial direct costs in, 1145 sales-type vs., 1141–1142 Direct method, 442–443 for accounts receivable (net), 1268–1269 for determining net cash flow from operating activities, 1250, 1260–1264 GAAP/iGAAP standards, 1283 indirect vs., 1251, 1264–1265 special rules applying to, 1265 Direct write-off method, 327–328 Disclaimer of an opinion, 1338 Disclosure(s), 343n.14 of change in accounting estimate, 1196–1197 for derivatives, 897 of fair value, 905–908 in financial statements, 947 of franchisors, 965 full (see Full disclosure in financial reporting) GAAP/iGAAP standards, 1347 of interest rates, 265n.2 of lease data, 1146–1148 of operating activities, 1265 as present value-based measurement, 265 of restrictions on retained earnings, 764–765 and Sarbanes-Oxley Act of 2002, 661 for securities, 881 and Statement of Position 94-6, 192 techniques of, 194–197 Disclosure—effectiveness project, 1315n.2 Discontinued operations, 137, 141–142, 148, 834n.20 Discounts, cash, 325–326 Discount bonds, 692, 693, 700, 708n.13 Discounting, 272–273 Discount notes, 705 Discount rate, of postretirement benefit obligation, 1086n.28 Discover, 330, 338 Discrete approach, 1330, 1334 Diversified (conglomerate) companies reporting, 1324–1329 Dividends. See also Stock dividends; specific types, e.g.: Liquidating dividends cash, 758–759, 1269 date determining receipt of, 758n.13 liquidating, 758, 760 property, 759 types of, 757 Dividend in arrears, 754 Dividends payable, 643 Dividend policy, 756 Dividend preferences, 771–772 Dollar-value LIFO method, 401–406, 452, 463–465 and AICPA Task Force on LIFO Inventory Problems, 442n.1 comprehensive, 402–403 for determining cost of single item, 442n.1 example, 401–402 and price index selection, 403–405 specific-goods pooled approach vs., 401–406 Dollar-value retail method, 401n.6 Double-declining-balance method, 545 “Double dipping,” 1118 Double-entry accounting system, 70 Double-extension method, 404 Dow Jones & Co, 744 Dr. (debits), 69–71 Dr. Pepper, 451 Dresser Industries, 173 DRSC (German Accounting Standards Committee), 1360 Drugs.com, 593 Drugstore.com, 37, 393, 872 Dudley, Lola W., 811n.11 Due process system, 10–11 Duffy, Wendy A., 495n.3 DuPont, 759 Dynegy, 710 E. F. Hutton, 322n.3 Eagle Clothes, Inc., 387 Earned capital, 744 Earned revenues, 933 Earnings, 132n.2 claim by stockholders, 743 retained (see Retained earnings) smooth, and changes in accounting method, 1203 Earnings before interest, taxes, depreciation, and amortization (EBITDA), 542 Earnings management, 133 Earnings per common share, 150 Earnings per share (EPS), 150–151, 811 calculating, 150n.18 for complex capital structure, 816–822 computations, 811–824 diluted, 816–821 illustration of, 830–834 on income statement, 137, 137n.9 interim reporting of, 1332–1333 for simple capital structure, 812–816 Eastern Air Lines, 1079 Eastman Kodak Company, 55, 145n.15, 329, 438, 510, 575, 1016, 1315 Eavis, P., 198, 330 eBay, 904 Ebbers, Bernie, 26–27 EBITDA (earnings before interest, taxes, depreciation, and amortization), 542 Ecolab, 177 Economic consequences, 17n.10, 541, 761n.14 Economic life, 1136n.13 Economic life test (75% test), 1122 Economic Recovery Tax Act of 1981, 564 EDGAR (electronic data gathering and retrieval), 1335n.12, 1344 Effective-interest method, 333, 704, 705 and accruing interest, 699–700 asset vs. liability accounting with, 1124 of bond amortization, 289–290 for bonds, 697–700 for bonds issued at discount, 697–698 for bonds issued at premium, 698–699 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 7. Index · I-7 Effective interest rate, 331n.9 Effective rate, calculating, 269n.5 Effective yield, 331n.9, 693 Efficiency ratios, 1350n.28 Efficient-market hypothesis, 1352 eFund, 352 EITF. see Emerging Issues Task Force EITF Issue No 86-29 (“Nonmonetary Transactions: Magnitude of Boot and the Exception to the Use of Fair Value”), 504n.8 Elective straight-line method, 566 Electronic data gathering and retrieval (EDGAR), 1335n.12, 1344 Electronic dissemination of financial reports, 1343 Eli Lilly, 597n.6 Elliott, J., 145n.15 Elmer’s Restaurants, 1167 El Paso Corporation, 557 El Paso Energy, 1005 Elstrom, P., 393 Ely, Michael, 1272n.9 Embedded derivatives, 895 Embraer, 1309–1310 Emerging Issues Task Force (EITF), 12, 143 Employees, as pension beneficiaries, 1052 Employee discounts, 457 Employee payroll deductions, 648 Employee-related liabilities, 646–651 Employee Retirement Income Security Act (ERISA) (1974), 1076–1078 Employee stock purchase plans (ESPPs), 808–809 Employer(s) payroll taxes paid by, 648 and pension plan risks, 1052 Enacted tax rate, 1004 Ending inventory, misstated, 389–390 Enron, 2, 5, 8, 17, 32, 49, 179, 337, 661, 688, 709, 710, 749, 865, 872, 886n.12, 902, 1005, 1314, 1321, 1321n.4, 1345 Entity change in reporting, 1197 as going concern, 1337 Entries adjusting (see Adjustments) reversing (See Reversing entries) Entwistle, G., 131 Environmental liabilities, 265, 658–661 EPBO. see Expected postretirement benefit obligation Epictetus, 642 EPS. see Earnings per share Equipment depreciation of, 1255 loss on sale of, 1257 purchase of, 1258 as worksheet entry, 1279 Equipment lease-versus buy analysis, 1341n.16 Equity on balance sheets, 180 owner’s, 189 Equity awards, share-based, 827 Equity classifications (compensation plans), 796 Equity errors, 1198 Equity holders’ claims, disclosure of, 1320 Equity interest, 718 Equity investment, 882 Equity method, 870–872, 1215–1218 changing from, 1215–1216 changing to, 1216–1217 and fair value options, 873–874 GAAP/iGAAP standards, 1212 and retrospective application, 1197n.6 Equity securities, 866–872 Erickson, Naomi, 1083n.25 Eralp, Osman, 617 Ernst and Young, 741 Errors, accounting, 1205–1214 on balance sheet and income statement, 1205–1208 correction of, 146 counterbalancing, 1205–1207 example of, 1199–1200, 1208–1210 fraud vs., 1322 on income statements, 1205 noncounterbalancing, 1207–1208 preparation of financial statements with corrections to, 1210–1211 reporting correction of, 1197–1201 types of, 1198 ESM Government Securities, Inc., 1346 eSpeed, 596 ESPPs (employee stock purchase plans), 808–809 Estée Lauder, 744 Estimate, changes in. see Change(s) in accounting estimate Estimates, judgments and, 179 Estimated annual effective tax rate, 1332 E-tailers, 393 Ethics, 19 E*Trade Financial, 633 Europe, aging population of, 1053 European Union (EU), 1358n.36 Eurotext, 740 Event, defined, 68 Exchange for noncash consideration, 868n.6 Exchange price, 324 Exchange rate risk, 890 Excise tax, 1078 Ex-dividend date, 758n.13 Executory contract, lease as, 1119 Executory costs, 1123 Exelon Corp., 703 Exercise price, 887 Expectations gap, 17–18, 1346n.26 Expected cash flow approach, 290–292 Expected inflation rate of interest, 291 Expected postretirement benefit obligation (EPBO), 1085, 1086 Expected rate of return, 1063, 1067 Expected reversal date, 1013 Expense(s) conditional, 651 on financial statements, 134 under GAAP/iGAAP, 155 on income statement, 136–137 pension, 1055–1057 postretirement, 1086 prepaid (see Prepaid expenses) Expense expenditures, 508–509 Expense recognition errors, 1198 Expenses subject to year-endadjustment, 1332 Expense warranty approach, 655–656 Exploration costs of depletion, 555 Extensible business reporting language (XBRL), 1343 External environment, fraud and, 1345 External events, 68, 74–75 External indexes, 403n.9, 405n.10 Extinguishment of debt, 701–703 Extractive industries, R&D costs of, 605n.12 Extraordinary gains, 149 Extraordinary items determining, 143n.14 frequency of, in 2004 survey, 142n.13 on income statement, 137, 142–144, 148 interim reporting of, 1332 reporting, 1271–1272 reporting, after September 11, 2001, 143 Extraordinary losses, 149 ExxonMobil, 74, 382, 554, 557, 558n.10, 886, 890, 1116 Eziba.com, 872 Face rate (interest), 269 Face value (bonds), 692 Factors, 339 Factoring arrangement, 339n.12 Factoring receivables, 339 FAF. see Financial Accounting Foundation Failure to adjust for bad debts, 1207–1208 Failure to record accrued wages, 1206 Failure to record prepaid expenses, 1206 Faircloth, Lauch, 27 Fair hedge value, 891–893 Fair value(s) of asset, 506 on balance sheets, 191, 193–194 of derivatives, 886n.14 disclosure of, 905–908 and EITF Issue No. 86-29, 504n.8 under GAAP/iGAAP, 345 hierarchy for, 886n.14, 905 hierarchy of, 193 of security, 859, 865, 879 of stock in lump-sum exchange, 746 of stock issued, 761 of stock options, 805 Fair value controversy, 880 Fair value hedge, 898–899 Fair value method changing from, 1216 changing from equity method to, 1215–1216 of stock compensation, 805, 809–811 for unrealized gains/losses, 1257n.5 Fair value options, 873–874 Fair value tests for indefinite-life intangible impairment, 601 for limited-life intangible impairment, 601 Falconbridge Ltd, Nickel Mines, 551 Fannie Mae, 811, 886n.12, 890 Farrell, C., 589 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 8. I-8 · Index FASAC (Financial Accounting Standards Advisory Council), 9–10 FASB. see Financial Accounting Standards Board FASB Concepts. see Statements of Financial Accounting Concepts FASB Interpretation No. 46(R) (“Consolidation of Variable Interest Entries (revised)—an interpretation of ARB No. 51”), 903, 904, 908 FASB Statements. see Statements of Financial Accounting Standards Federal Insurance Contribution Act (F.I.C.A.), 646–647 Federal Reserve Bank, 291 Federal Unemployment Tax Act (F.U.T.A.), 647 Federated Department Stores, 436 FedEx Corporation, 55 Feedback value, 1349 Feltham, G., 131 FFO (funds from operations), 547n.7 FFP Marketing, 66 F.I.C.A. (Federal Insurance Contribution Act), 646–647 FIFO. See First-in, first-out Fifth Third Bancorp., 5 Final reconciling entry, 1280–1281 Financial accounting, as discipline, 4, 6 Financial Accounting Foundation, 9, 26 Financial Accounting Standards Advisory Council (FASAC), 9–10 Financial Accounting Standards Board (FASB), 26 on accounting changes, 1182–1183 Accounting Standards Codification, 13–15 APB vs., 9–10 on basis for statement of cash flows, 1245n.1 and capitalization of interest costs, 392 and cash and cash equivalents, 197n.13 Codification Research System, 14 and compensation plans, 796n.1 Concepts of, 12 (See also Statements of Financial Accounting Concepts) on differential disclosure, 1315 on direct method on statement of cash flows, 1252 due process system of, 10–11 and Emerging Issues Task Force, 12 and financial engineering, stance on, 710n.14 and financial statements, 179–180 and GAAP, 9–12 and goodwill measurement, 599n.8 and guarantees, 665n.20 and held-to-maturity requirement, 859n.2 improved financial statement presentation, 1344 on income taxes as operating cash outflows, 1271 and international standards, 1358–1360 Interpretations (see FASB Interpretations) and irregular items, 139 on leased property, 1124 and loss contingencies, 328, 652 on operating cash receipts/payments, 1265 on pension plans, 1056–1057, 1070n.14 on postretirement benefits accounting, 1082–1083, 1086n.28, 1091 and sales, 341 and SEC, 7, 8n.6 and staff positions, 11 Standards of, 11, 1360 (See also Statements of Financial Accounting Standards) Technical Bulletins of, 11 and transactions, 74–75 on uncertain tax positions, 1016–1017 Financial components approach, 340 Financial engineering, 710n.14 Financial flexibility, 179, 199, 204 Financial forecasts, 1341–1343 Financial income, 992, 1001–1004 Financial information, types of, 1314 Financial instruments, 193 Financial liquidity, 204 Financial markets, 1356 Financial position, statement of. see Balance sheet(s) Financial projections, 1341–1343 Financial reporting, 4. See also Reporting accuracy of, 2–3 and expectations gap, 17–18 of international accounting standards, 18 objectives of, 6–7 and politically-influenced standard setting, 15–17 Financial Reporting Standards Board (FRSB), 1360 Financial statement(s), 4 correcting errors on, 1199–1201 defined, 69 elements of, 134–135 example of, 210–238 general-purpose, 7 installment-sales transactions presentation, 955–956 interest rate swap presentation, 899–900 inventory accounting for, 442n.2 maintaining monthly vs. quarterly, 96 management’s responsibilities for, 1340 for merchandising company, 96–98 notes to the (see Balance sheet(s)) and ownership structure, 72 pecentage-of-completion presentation, 942–943 pension plan reporting in (see Pension plan reporting) preparing, 91–92 preparing, with error corrections, 1210–1211 presenting, 864–865 worksheet preparation of, 110 Financial statement analysis, 1349–1355 comparative analysis, 1353 percentage analysis, 1354–1355 perspective on, 1349–1350 ratio analysis, 1350–1352 Financing activities, 199, 201, 1245, 1246 Financing agreement, 642 Firm (as concept), 448n.8 “Firm” contractual rights and obligations, 1120 Firm purchase commitments, 448n.8 First Chicago, 1157 First-in, first-out (FIFO), 460 for assigning investment costs, 868n.6 and cost flow assumption, 396–397 and LIFO, 398–399 Fixed assets, 490 Fixed percentage of book value method. see Declining-balance method Fixed-rate mortgage, 709 Fleming, Sir Alexander, 595n.4 Flexibility, financial, 179, 199, 204 Flint, J., 381 Float, collection, 347 Floating-rate mortgage, 709 Floor (lower), 439–440 f.o.b. (free on board) destination, 387 Footstar, 143 Ford Motor Company, 4, 17, 38, 40, 132, 177, 194, 381, 382, 414, 550n.8, 650, 651, 741, 744, 1084, 1182, 1266, 1363 Foreign Corrupt Practices Act, 66 Foreign currency hedging, 890n.20 Form 10-Q, 1330 Fortune Brands, Inc., 458, 538 Forward-looking information, 5 Foster, Taylor W., III, 761n.15, 764n.17 401(k) plan, 1051 Foust, D., 1005 France, 1360 Franchise(s), 595, 962–965 Franchise agreement, 963 Franchise fees, continuing, 964 Franchisor’s cost, 965 Fraud check, 349n.16 recorded by ChexSystems, 352 Fraudulent financial reporting, 1344–1346 accounting errors vs., 1322 causes of, 1345–1346 National Commission on, 1322n.6 Freddie Mac, 337, 890 Free cash flow, 204–205, 209 Free on board (f.o.b.) destination, 387 Freight costs, 456 Frequent-flyer programs, 658 Frito Lay, 35 FRSB (Financial Reporting Standards Board), 1360 Fruehauf, 1314 Full-cost concept, 557 Full-costing approach, 492 Full disclosure in financial reporting, 1314–1316 of auditor’s reports, 1335–1338 criteria for accounting/reporting choices in, 1346 current reporting issues with, 1341–1346 and differential disclosure, 1315–1316 of diversified companies, 1324–1329 on financial forecasts/projections, 1341–1343 and fraudulent reporting, 1344–1346 increase in reporting requirements, 1315 of interim reports, 1330–1335 on Internet, 1343 issues with, 1321–1335 of management’s reports, 1338–1340 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 9. Index · I-9 and notes to financial statements, 1316–1321 of post-balance-sheet events, 1323–1324 as principle, 1314–1315 of special transactions/events, 1321–1322 and stock markets, 1316 Functional expense classification, 137 Fund (term), 1050n.1 Funds from operations (FFO), 547n.7 Fuqua Industries, 406–407 F.U.T.A. (Federal Unemployment Tax Act), 647 Future deductible amounts, 997 Future tax consequences, 1017 Future tax rates, 1004–1005 Future tax savings, 1007 Future value of an annuity due, 278–281 of annuity, 278–279 of an ordinary annuity of 1 (table), 267–268 computing for unknown, 270 of deferred annuity, 286–288 of 1 (table), 267–268 of single sum, 271–272 as variable in compound interest, 270 GAAP. see Generally accepted accounting principles Gage. J., 177 Gains, 1270 on financial statements, 135 on income statements, 137 on pension plans, 1063–1067 and postretirement expense, 1086, 1088 Gain contingencies, 651–652 Gains trading, 880 The Gap, 1116 Gap fillers, 598 Gap Inc., 457, 590, 645 Gateway, 1315 General checking account, 347–348 General Dynamics, 49 General Electric (GE), 49, 55, 132, 145, 329, 608, 643, 741, 809, 811, 885, 890, 1082, 1084, 1111, 1324–1325 General Electric Capital Corp., 643, 1158 General Electric Credit, 1158 General expenses, 136 General Foods, 1332 General indexes, 403n.9 General journal entry, 75 General ledger, 69, 75 Generally accepted accounting principles (GAAP), 7, 13 and actual interest capitalization, 494 “big” vs. “little,” 1316 codification of, 19 and fair value, 896n.32 hierarchy, 13n.7 and IFRS, 1183n.1 international and U.S., 1357, 1360 major sources of, 13 and OPEBs, 1055n.9 organizations settings standards for, 8–13 and variable interest entities, 902 General Mills, Inc., 89, 360, 604 General Motors (GM), 38, 40, 337, 380–381, 491, 550n.8, 691, 692, 742, 759, 811, 823, 1005, 1010n.6, 1049, 1051, 1078n.16, 1084, 1266 General Motors Acceptance Corp. (GMAC), 337 General-purpose financial statements, 7 General Tire and Rubber, 408n.16 Georgia-Pacific, 172, 447, 512 German Accounting Standards Committee (DRSC), 1360 Germany, 1360 Gerth, J., 557 Gibson, R., 49, 1128 Gillette, 224–226, 235–236 GlaxoSmithKline plc, 634, 1019 Gleckman, H., 1005 Global Crossing, 49, 506, 932, 1150, 1315 Going concern concept, 1337 Goldman, Sachs & Co., 1313 Golf Digest, 644 Goods in transit, 387 Goodwill, 597–601 economic consequences of, 16 impairment of, 602–603 recording, 598–600 as write-off, 600 Goodyear Tire and Rubber, 540, 689, 1005, 1016, 1051 Google, 96, 590, 744, 884 Gore, Richard, 547n.7 Gotham Utility Company, 649 Governmental Accounting Standards Board (GASB), 1091 Granof, Michael H., 408n.17, 410n.22 Grant date, 805 The Great Atlantic & Pacific Tea Company, 188 Greenberg, Herb, 542, 689 Greene, Kelly, 1082n.21 Gross margin percentage, 450n.11 Gross profit method (gross margin method), 451 Gross profit on selling price, 450 Gross profit percentage, 450–451 Grothe, M., 1181 Group methods for depreciation, 545–547 Guarantees, 655–657, 657n.15, 665n.20. See also Warranties Guaranteed residual value, 1123 in capitalization of lease, 1149 in lessee accounting, 1137–1138 in lessor accounting, 1140–1141 for sales-type lease, 1143 Gujarathi, Mahendra R., 448n.8 Gulf Oil, 742 H. J. Heinz Company, 1373 Half-year convention, 549, 565 Hall, C., 177 Halliburton Company, 186–187, 948, 1186 Halperin, Alex, 744 Hambrecht & Quist, 617 Hamm, S., 589 Hanna, D., 145n.15 Harley-Davidson, Inc., 1322 Harris, Trevor, 634 Hasbro, Inc., 184 Hayes, Randall, 401n.8, 406n.11 HCA, 319 Healthcare benefits, 1082n.21, 1083–1084 Healthsouth, 32 Hedging, 885, 890–894 Held-to-maturity debt securities, 182, 859–861, 882 Henriques, D., 323 Henry, David, 763 Hershey Foods, 173, 410, 745 Hertz, 962 Herz, Bob, 19, 337 Hewitt, Conrad W., 3 Hewlett-Packard Company, 343n.14, 603, 604, 1051, 1147–1148, 1197, 1244 Hickok, Richard S., 938n.16 Historical cost, 179–180 Hof, R. D., 591 Holiday Inn, 962 The Home Depot, 491, 1122, 1340 Homer, Sidney, 262 Homestake Mining Company, 1045 Homestore Inc., 931 Honeywell Inc., 750, 823 Honghua Group Ltd, 741 Horizontal percentage analysis, 1354 Host security, 895 H & R Block, 962 Hudson, M., 353, 354 Huffy Corp., 716 Hurricanes, 1324n.8 Hybrid methods for depreciation, 547 Hybrid plans, 1078n.19 Hybrid securities, 895 IASB. see International Accounting Standards Board IASCF (International Accounting Standards Committee Foundation), 1358 IBM Corporation, 4, 18, 36, 132, 180, 208, 240, 382, 389, 589, 608, 614n.17, 617, 1082, 1117, 1131, 1162–1163, 1315 IBM Global Financing, 1117 IDEA (Interactive Data Electronic Applications), 1344 If-converted method, 817, 831, 832 IFRS. see International Financial Reporting Standards iGAAP. see International GAAP iGo Corp., 930 Ijiri, Yuji, 448n.8, 1120n.3 ILFC, 1122–1124 Illegal acts, 1322 Imhoff, Eugene A., Jr., 1352n.30 Impaired note receivable, 336–337 Impairments, 551–554, 875 GAAP/iGAAP standards, 552, 553 measuring, 354–356, 552–553 of receivables, 352–356 recognizing, 352–354, 551–552 recoverability tests for, 552, 601 and SFAS No. 114, 718n.16 Impairment loss, 354–356, 553 under GAAP/iGAAP, 612 GAAP/iGAAP standards, 562 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 10. I-10 · Index Impairment test, 592, 612 Implicit interest rate, 332–333, 1123–1124 Impracticability, 1193–1194 Imprest bank accounts, 348 Imprest petty cash system, 348–349 Imprest system for petty cash disbursements, 348–349 Imputation, 335, 707 Imputed interest rate, 335, 707 Inadequacy, 541 Income approach, 500n.4 Income available to common stockholders, 816 Income before taxes. see Pretax financial income Income bonds, 691 Income statement(s), 69, 132–135 alternate terminology for, 132n.2 and cash flows statement, 1248–1249, 1253, 1256, 1260 columns on, 110 and comprehensive income, 152–154 condensed, 138–139 deferred tax reporting on, 1000–1001, 1013–1015 and earnings per share, 150–151 errors on, 1205–1208 example, 96 and extraordinary gains, 149 and extraordinary losses, 149 format of, 134–139 illustration of, 1276 intermediate components of, 136–137 and intraperiod tax allocation, 148–149 irregular items reported on, 139–140 limitations of, 132–133 and quality of earnings, 132–133 and retained earnings statement, 151–152 segmented, 1325 single-step, 135–136 and unusual gains and losses, 144–145 usefulness of, 132–133 Income statement (percentage-of-sales) approach, 328 Income statement method. see Direct method Income taxes, accounting for, 992–1018, 1265n.6 accounting objectives, 996–997 asset-liability method, 1017 on balance sheet, 1011–1013 deferred taxes, 993–1000, 1018, 1267 depreciation, 564–567 and future deductible amounts, 997 and future taxable amounts, 993–994 on income statement, 137, 1000–1001, 1013–1015 interim reporting, 1332 interperiod tax allocation (example), 1021–1028 LIFO, 407n.13 and net operating losses, 1006–1011 as operating cash outflows, 1271–1272 and uncertain tax positions, 1016–1017 and withholding, 647–648 Income tax benefit, 1018 Income tax expense, 1018 Income taxes payable, 646 Incorporation acts, 742 Increasing-charge method, of depreciation, 547 Incremental borrowing rate, 1123, 1125n.7 Incremental direct costs, 1145 Incremental method, 747, 801, 832, 833 Incremental shares, 819n.16 Indefinite-life intangibles, 592, 602 Independent lessors, 1117 Independent third-party trustee, 1051 Indexes, computing, 403–405 Indirect method, 442–443 for accounts receivable (net), 1267–1268 for determining net cash flow from operating activities, 1250–1251, 1259–1260 direct vs., 1264–1265 GAAP/iGAAP standards, 1283 special rules applying to, 1265 Induced conversions, 797–798 Indy Mac Bank, 8 Inflows, cash, 1274 Information, financial, 1314 Information overload, 1315 Information technology, 1356 Initial direct costs (lessor accounting), 1145 Initial franchise fee, 963–964 Initial operating-losses, 607 Inland Steel, 543 Input, in depreciation, 543 Installment-sales accounting method, 948–956 Instruments, financial, 193 In-substance defeasance, 701n.7 Insurance, adjusting entries for, 82–83 Intangibility index, 588–589 Intangible assets, 588–603, 609–611. See also specific types, e.g.: Limited-life intangibles amortization of, 591–593 on balance sheets, 186 characteristics of, 591 defined, 590 impairment of, 601–603 limited-life, 1266 presentation of, 609–611 valuation of, 590 Integral approach, 1330, 1334 Intel, 20, 45, 85, 240, 265, 444, 511, 608, 902, 1356 Interactive Data Electronic Applications (IDEA), 1344 Interbrand Corp., 608 Interest. See also Compound interest accruing with effective-interest method, 699–700 capitalization of, 392n.3, 392n.8, 495 components of, 291 computation of, 265–266 costs of, 392 as pension expense, 1057 as period cost, 392 as postretirement expense, 1086 and time value concepts, 265 variables in computation of, 265 Interest-bearing notes, 331, 333–335, 639–640, 705–706 Interest rate(s), 495 in capitalization of lease, 1149 choosing, 291, 335 computation of, 285 disclosure requirement, 265n.2 implicit, 332–333 imputed, 335 as variable in interest computation, 265 Interest rate risk, 890 Interest rate swap, 899–900 Interest revenue, 326, 498 Interest tables, 267–268 Interim period tax, 1332 Interim reports, 1330–1335 continuing controversy about, 1334–1335 GAAP/iGAAP standards, 1347 requirements for, 1330–1331 unique problems of, 1331–1335 Internal controls, 17 under GAAP/iGAAP, 99 over cash, 347 Internal direct costs, 1145 Internal environment, fraud and, 1345 Internal events, 75 Internal indexes, 403n.9 Internally created goodwill, 598 Internally created intangibles, 590 Internal Revenue Code, 992–993 Internal Revenue Service (IRS), 66 and indexes, 405n.10 and LIFO conformity rule, 409 and purchases-only-approach, 465n.2 International accounting convergence. See Convergence, of U.S. and international standards International accounting standards, 18, 1356–1360 accounting changes and errors, 1212 on cash and cash equivalents, 1245 challenge of, 1357 convergence of FASB and, 1359–1360 disclosure, 1347 IASB in, 1358–1359 IOSCO, 1358 for leases, 1151 national standard setters, 1358 present environment, 1356 rationale for understanding, 1356–1357 International Accounting Standards Board (IASB), 18, 20, 64–65, 813, 817, 1080, 1183n.1, 1344, 1358–1359 International Accounting Standards Committee Foundation (IASCF), 1358 International Financial Reporting Standards (IFRS), 18, 1080, 1183n.1, 1347, 1358, 1360 GAAP comparison to, 637 interim reporting, 1334 International GAAP (iGAAP), 1358. See also Convergence, of U.S. and international standards and income taxes, 1018 valuation of long-term debt, 692 International Lease Finance Corp. (ILFC), 1120 International Organization of Securities Commissions (IOSCO), 1358 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 11. Index · I-11 International Paper Co., 16, 195, 538, 550, 560, 823 International stock exchanges, 740 International Thoroughbred Breeders, 321 Internet financial reporting, 1343 Intraperiod tax allocation, 148–149 Intrinsic value, 887 Intuit Inc., 182–183 Inventory(-ies), 382–386. See also related headings, e.g.: Periodic inventory system alternative method for estimating, 449n.10 analysis of, 459 average days to sell, 459 on balance sheets, 183–184 basis of valuation of, 181 control, 383–386 costs included in, 391–393 defined, 382 disclosure of, 1319 estimating, using gross profit percentage, 449n.10 GAAP/iGAAP standards, 1212 gross profit method for, 449–451 increase in, 1256–1257 land as, 491 management of, 436–437 method selection for, 409–411 misstated, 390–391 at net realizable value, 445 presentation of, 457–459 purchases of, 406n.11 valuation of, 386, 410–411, 445–448 as worksheet entry, 1278 Inventory cost flow, 383 Inventory errors, 389–391, 1198 Inventory methods, 385.1, 408n.18 Inventory turnover ratio, 459 Investing activities, 198, 201, 1245, 1246 Investment(s), 856–881 available-for sale securities, 861–865, 868–870 in common stock, 1267 in debt securities, 858–865 derivatives, 884–900 equity method for accounting, 870–872 equity securities, 866–872 fair value controversy, 880 and FASB interpretation No. 46(R), 903, 904, 908 held-to-maturity securities, 859–861 holdings of less than 20%, 867–870 impairment of value, 875 long-term, 184–185 PPE, 491 security, 858n.1 short-term, 181–183 in stock, as worksheet entry, 1278 trading securities, 865–866, 870 transfers between categories, 879 variable-interest entities, 902–904 Investment accounting approaches, 858 Investment carrying amount, 1215–1216 Investor groups, 769 Investors’ expectations, 1357 IOSCO (International Organization of Securities Commissions), 1358 I.O.U.s, 320 Ip, Grep, 187 iPhone, 593 Irregular items analyzing, 141 categories of, 141 and FASB, 139 in income statement, 148 on income statement, 139–140 summary of, 147–148 IRS (Internal Revenue Service), 66 Issue costs, 748 J. Crew, 5 J. P. Morgan Chase, 608 Jack in the Box, 49, 1128 Jaenicke, Henry R., 934n.9 Japan, 1053, 1122, 1360 Japan Airlines (JAL), 1178 JCPenney Company, 409, 436, 691 Jenkins, Edmund L., 1357n.32, 1358n.33 Jiambalvo, James, 1198n.7 Jiffy Lube International, 963n.30 Jim Walter’s Corporation, 498 Job Creation and Worker Assistance Act of 2002, 564n.1 John Deere and Company, 172, 259, 337, 410, 604, 1051 John Deere Credit, 337 Johnson, L. Todd, 877n.9 Johnson Controls, 16 Johnson & Johnson, 534–535, 604, 633, 749, 886, 1329 Jones, S. D., 49, 1128 Journal(s), 69, 75–76 Journal entry, general, 75–76 Journalizing, 75–76 JPMorgan Chase & Co., 187, 1116 Judgments and estimates, 179 Junk bonds, 694 Kahn, Jeremy, 933 Kaiser Aluminum, 1079 Kardous, D., 451 Kazenski, Paul M., 495n.3 Kellogg Company, 35, 127–128, 459, 490, 604, 745, 766, 791, 852–853, 1078, 1332 Kelly, Kate, 187 Kelly Services, 962 Kerwin, K., 1005 Keystone Consolidated Industries, 144 KFC, 962 Kiley, David, 597, 608 Kimberly-Clark Corp., 904, 1164 Kimco Realty, 547, 585–586 King, Thomas E., 505n.9 Kirk, Donald, 617 KLM Royal Dutch Airlines, 1178 Kmart, 437 Kmart Holding, 1015 Knutson, Peter H., 1120n.2 Kohls, 326 Krispy Kreme, 5, 176, 709, 1016, 1114–1115, 1118 Kroger, 177, 561 Kurzweil Applied Intelligence Inc., 389 Kyowa Hakko Kogyo Co., Ltd., 1112 Labaton, S., 557 Laboratory Corp. of America, 689 Lafley, A. G., 212, 215 Lahart, J., 749 Land cost of, 491 decrease in, 1258 expenditures for, 498 increase in, 1254 as worksheet entry, 1278 Landsman, Wayne, 802n.6 Largay, James A., III, 1243 Large stock dividends, 761n.15 Larson, R. K., 938n.17 Last-in, first-out (LIFO). See also LIFO entries adoption of, for inventory valuation, 1194n.4 advantages of, 406–407 approach comparisons, 405–406 and cost flow assumption, 397–398 disadvantages of, 407–408 external indexes computations, 405n.10 and FIFO, 398–399 and future earning hedge, 407 specific-goods, 400–401 tax benefits, 406–407, 409 Lavelle, Louis, 795n.1 Lawsuits, 1341n.18 Layers, 399–400 LBO (leveraged buyout), 750 LCM. see Lower-of-cost-or-market Leach, Jim, 27 Lease accounting and bargain purchase option, 1144 current vs. noncurrent classification in, 1145–6 and disclosing lease data, 1146–1148 and initial direct costs, 1145 by lessee, 1120–1129 by lessor, 1130–1135 and residential values, 1136–1141 for sales-type leases, 1141–1144 special problems in, 1135–1148 unsolved problems in, 1148–1150 Leases and leasing, 1116–1160 accounting for (see Lease accounting) advantages of, 1118–1119 classifications of, 1131–1132 conceptual nature of, 1119–1120 and disclosure, 1320 economics of, 1130 environment for, 1116–1120 examples of, 1153–1157 GAAP/iGAAP standards, 1151 lessor types in, 1116–1117 operating leases, 710 term of lease, 1118, 1122, 1136n.13 Lease receivable, 1132–1135, 1142 LeClere, Marc J., 409n.19 Ledger, 69 Lee Enterprises Inc., 603 Legally restricted deposits, 322 Lennard, A., 1149n.20 Leone, M., 1181 LePeep Restaurants, Inc., 963n.30 Leslie Fay (company), 391 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 12. I-12 · Index Lessee accounting, 1120–1129 of assets vs. liabilities, 1124 for bargain purchase option, 1144 capitalization criteria for, 1121–1124 capital lease method of, 1124–1127 capital vs. operating, 1128–1129 operating method of, 1127–1128 for residual value, 1137–1140 for sale-leasebacks, 1158 Lessor accounting, 1130–1135 benefits of, 1130 and classification of leases, 1131–1132 direct-financing method of, 1132–1135 and economics of leasing, 1130 for initial direct costs, 1145 operating method of, 1135 for residual value, 1140–1141 for sale-leasebacks, 1158 for sales-type leases, 1141–1144 Lev, Baruch, 609n.16 Level 8 Systems, 47 Leveraged buyout (LBO), 750 Leverage ratios, 1350n.28 Levitt, A., 133n.4 Lewent, Judy, 1312 Liability(-ies), 638 on balance sheets, 180, 186–188 contingent (see Loss contingencies) current vs. noncurrent lease, 1145–1146 defined, 638 employee-related, 646–651 environmental, 660 and fair value option, 874 in lessee accounting, 1124, 1129 long-term, 188 pension, 1064 Liability approach, 1017 Liability awards, share-based, 827–828 Liability measurements, 714 Liability valuation account, 700 Liberty International, 585–586 Licenses, 595 Liesman, S., 15, 140, 999 LIFO. see Last-in, first-out LIFO conformity rule, 409 LIFO liquidations, 399–401, 408n.15, 443n.3 LIFO matches, 406 LIFO method, dollar-value, 401–406 LIFO reserve, 398–399 LIFO retail methods, 452, 462–466 changing from conventional retail method to, 465–466 and stable prices, 462–463 Limited Brands Inc., 990–991 Limited-life intangibles, 591, 1266 accounting treatment for, 593 fair value tests for, 601 impairment of, 601 Lipe, Robert C., 1352n.30 Liquidating dividends, 557, 758, 760 Liquidity, 178, 199 Liquidity evaluation, 400–401 Liquidity ratios, 208, 1350, 1351 Litigation, 654–655, 1341–1343 Lloyd’s of London, 1149n.18 Loans, 352n.17, 1246n.2 Loans.com, 593 Lobbyists, 1204n.13 Lockbox accounts, 347 Loews Corporation, 1076 Logarhythmics, 269n.4 Long Island Railroad (LIRR), 66 Long-term assets, 264 Long-term bonds, valuation of, 288–289 Long-term borrowing, 322 Long-term contract losses, 944–947 Long-term debt, 690 analysis of, 713 current maturities of, 641 on financial statements, 690 off-balance-sheet financing, 709–711 presentation of, 711–712 reporting, 709–713 and SAF Opinions No. 5, 709 and SAF Opinions No. 6, 709 Long-term investments, 184–185 Long-term liabilities, 688–713 on balance sheets, 188 bonds payable, 690–703 long-term notes payable, 703–708 and reporting and analysis of debt, 709–713 Long-term notes payable, 703–708 Loomis, Carol J., 603 Loss(es) accumulated other comprehensive loss, 765n.19 from continuing operations, 834n.21 on financial statements, 135 in income statement, 137 on pension plans, 1063–1067 and postretirement expense, 1086 in sale-leasebacks, 1158 on sale of equipment, 1257 and SFAS No. 6, 135n.7 Loss carrybacks, 1006 Loss carryforwards, 1006 deferred tax assets recognized as, 1008n.4 example, 1007–1011 operating, 1008–1009 period length for, 1007n.3 with valuation allowance, 1009–1010 without valuation allowance, 1008–1009 Loss contingencies, 352, 652–666 coupons, 657 environmental liabilities, 659–660 and FASB, 323, 652 guarantee and warranty costs, 655–657 litigations, claims, and assessments, 654–655 of no-par stock, 745–746 premiums, 657–658 self-insurance, 661–662 Loss measurement, 144 Loudder, Martha L., 609n.16 Lower (floor), 439–440 Lower-of-cost-or-market (LCM) applying, 441–442 and net realized value, 439–440 in practice, 445n.5 and recording market instead of cost, 442–444 Lower-of-cost-or-market (LCM) rule, 439, 440, 444, 445 LTV Corporation, 755, 1079 Lubore, Seth, 1115 Lucent Technologies, 763, 823, 937, 1064 Lump-sum exchange, 747 Lump-sum price, 500 Lump-sum purchases, 500 McConnell, Pat, 1015n.8 McDermott, D., 141n.11 MacDonald, Elizabeth, 1115 McDonald’s Corporation, 4, 20, 49, 81, 135, 584–585, 595, 885, 962, 1116, 1356 McGregor, Warren, 1120n.2 MacKay, Archibald E., 963n.29 McKay, P., 749 Mack Trucks, Inc., 183 McLean, Bethany, 319 McNamee, M., 694 MACRS. see Modified Accelerated Cost Recovery System McTauge, R., 49 Maher, Kris, 489 Mahoney, Jeff, 337 Major repair, 510–511 Maker, 331 Mallorca Ltd, 769 Management, 1338–1340, 1349 Management’s discussion and analysis (MD&A), 1338–1340 Managerial accounting, 4 Mandel, M., 589 Manufacturers Hanover Trust Co., 347 Manufacturing, 382, 392 Maremont, M., 1144 Marginal principle approach, 1332 Markdowns, 451, 453 Markdown cancellations, 453 Market(s) (GAAP/iGAAP definition), 438 Marketable securities, 320n.2 Market approach, 500n.4 Marketing-related intangible assets, 593 Market rate, 331n.9, 693 Market-related asset value, 1063 Market value, and accounting quality, 134 Markup, 451, 453 Marriott, 595, 962 Martha Stewart Living, 744 Masco Corporation, 1324 MasterCard, 338, 339n.12 MasterNet, 67 Master valuation accounts, 598 Master valuation approach, 599–600 Matching principle, 45n.13 Mattel, Inc., 185 Maturity value (bonds), 692 Maxwell House, 325 May Department Stores, 436 Maytag Corp., 1116 Mbagwu, C., 131 MD&A. see Management’s discussion and analysis Means, Grady, 489 Means, Kathryn, 495n.3 Medicare, 646–647 Mehring, James, 703 Meineke Mufflers, 962 Mellors, F., 1078n.19 Mercedes-Benz, 608 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 13. Index · I-13 Merchandising concerns, 382 Merck & Co., Inc., 595, 604, 609, 611, 633, 634, 651, 1051, 1118, 1312 Meredith, 744 Mergers and acquisitions, 816n.14, 1356 Merit rating, 647 Mermin, G., 1049 Merrill Lynch, 811 Mesa Limited Partnerships, 558n.12 Metallgesellschaft, 886n.12 Mexico, 1357 M&I Bank, 885 Microsoft Corporation, 4, 5, 18, 133, 265, 323, 377–378, 589, 608, 615, 644, 645, 751, 795 MicroStrategy, 134, 158, 1315, 1319 Midway, 178 Miller, G. S., 1011 Miller, Paul B. W., 1058n.12, 1272n.9 Minimum lease payments, 1122, 1137 Minimum liability, pension, 1076 Minimum rental payments, 1122 Misclassification errors, 1198 Mobile Telecommunications Company Saudi Arabia, 741 Model Business Corporate Act, 742 Modified Accelerated Cost Recovery System (MACRS), 564–567 example of, 564–566 optional straight-line method vs., 566 property classes, 564 and tax depreciation methods, 565 Modified cash basis, 102 Modified perpetual inventory system, 385 Mohican Company, 686 Molson Coors Brewing, 324, 1051 Monetary assets, 501n.5 Monetary exchange, 504n.8 Money-market funds, 320n.1 Money-market savings certificates, 320n.1 Monsanto Chemical Corporation, 329, 1343 Montavon Winery, 642 Montgomery Ward, 437 Monthly financial statements, 96 Moody’s Investors Service, 694 Moran, M., 823 “More likely than not,” 999 Morgan Stanley, 608, 865 Morgenson, Gretchen, 37, 47, 177, 1321 Mortgages, 708–709 Mortgage notes payable, 708–709 Moses, O. Douglas, 1203n.12 Moto Photo, Inc., 963n.30 Motorola Inc., 45, 55, 185, 382 Mott, D., 1015n.8 Moving-average method, 395 Mulford, Charles W., 1079n.20, 1272n.9, 1273 Multinational corporations, 1356 Multiple-step income statements, 136 Mumford of Wyoming, 458 Myers, David, 26–27 Myers, John H., 1120n.2 Nailor, H., 1149n.20 NASDAQ, 740 National Car Rental, 962 National Commission on Fraudulent Financial Reporting, 1322n.6, 1344n.24 National Steel, 1079 Natural expense classification, 137 Natural resources, 559 Navistar, 593, 1005 NBC TV, 1325 NBC Universal, 1325 NEC, 960 Nesco Holdings, Inc., 652 Nestlé Group, 714 Net cash flow direct method of determining, 1250 indirect method of determining, 1250–1251, 1265 from investing/financing activities, 1248, 1251–1252, 1254–1255, 1257–1258 from operating activities, 1249–1251, 1253–1254, 1256–1261, 1270 Net income cash flows vs., 204 and indirect method, 1265 Net increase in cash, 201 Net losses, 137n.9, 1269–1270 Net method, 392–393 Net of cash discounts, 392 Net operating loss (NOL), 1006–1011 Net periodic postretirement benefit cost, 1086 Net realizable value, 445, 460 Net realized value (NRV), 439–440 Net settlement, 889 Net working capital, 187 Neutrality, 1204 New allowance account, 443 New average unit cost, 395–396 New Century, 43 Newmont Gold Company, 458 New York Stock Exchange (NYSE), 740, 1051n.3 The New York Times, 744 Nicholaisen, Don, 49 90% test. see Recovery of investment test Nissan (formerly Datsun), 593 Noel, J., 381 Nokia Corporation, 460 NOL. see Net operating loss NOL carrybacks. see Loss carrybacks NOL carryforwards. see Loss carryforwards Nominal accounts, 69 Nominal rate, 269, 692 Noncalculable purchase commitments, 448n.8 Noncash charges/credits, 1280 Noncash transactions, 1272–1273 Non-consolidated subsidiary, 709 Noncontributory pension plans, 1050 Noncounterbalancing errors, 1205, 1207–1208 Noncurrent assets, 184–186 Noncurrent receivables, 323 Nondetachable stock warrants, 802 Nonfinancial measurements, 5 Non-interest bearing notes. see Zerointerest-bearing notes Nonmonetary assets, 501–506, 512, 562 Nonpublic enterprise, 812n.12 Nonqualified stock-option plans, 827 Nonreciprocal transfers, 506 Nonrecognized subsequent events, 1323–1324 Nontrade receivables, 323–324 No-par stock, 745–746 Norby, William C., 33n.3 Nordstrom, 436, 438 Norfolk Southern Corporation, 55, 1064 Normal shortages, 456 Normand, Troy, 26–27 Norris, Floyd, 356, 799, 1312 Nortel, 5, 318–319, 488–489 Northern Trust Company, 271 Northland Cranberries, 685 Northwest Airlines, 178, 716, 1048 Northwest Industries, Inc., 868 Note(s) accounting for, 703 bonds vs., 703 choice of interest rate for, 707–708 common, 1319–1321 discount, 705 interest-bearing, 331, 333–335, 705–706 issuance of, at face value, 332, 703–704 issuance of, for property, goods, and services, 335, 706 of noncash investing/financing activities, 1272 not issued at face value, 332–335, 704–706 as present value-based measurement, 264 Notes payable, 639–641, 703n.10, 706–709, 1269 Notes receivable, 323 disposition of, 337–342 fair value option for, 336 impaired, 336–337 recognition of, 331–335 valuation of, 335–336 Notes to the financial statements, 188n.10 accounting policies in, 1316–1319 as disclosure technique, 195 pension plan reporting within, 1058, 1072–1074, 1076 postretirement benefits reporting within, 1090–1091 Notional amount, 887 Not-sufficient funds (NSF) checks, 350 Noven Pharmaceuticals, Inc., 432–433 NRG Energy, 688 NRV. see Net realized value NSF (not-sufficient funds) checks, 350 NYSE (New York Stock Exchange), 740, 1051n.3 NYSE Eurotext, 740 O.A.S.D.I (old age, survivor, and disability insurance), 646–647 Obligations (postretirement benefits), 1085 Obsolescence, 541 Occidental Petroleum, 377, 1078 Off-balance-sheet financing, 709–711 disclosure of, 1320 forms of, 709–710 and leases, 1118, 1119, 1129 rationale for, 710 and SEC stance on, 710 Ohio Edison, 1157 Oil and gas industry, depletion issues in, 557–559 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 14. I-14 · Index Old age, survivor, and disability insurance (O.A.S.D.I), 646–647 Olofson, Roy, 506 OMX, 740 On-balance sheet financing, 711 1-800-Flowers, 744 One-time items, 145n.15 Opdyke, Jeff, 756n.10 OPEB. see Other postretirement benefits Operating activities cash provided by, 201 net cash flow computation from, 1249–1251, 1253–1254 net income vs. net cash flow from, 1249–1250 and securitizing receivables, 1251 on statement of cash flows, 198, 1245, 1246, 1256–1257 Operating cycle, 639 Operating expense computation, 103–104 Operating leases, 710, 1132, 1135, 1145 Operating lease method, 1127–1129, 1135 Operating loss carryforwards, 1008–1009 Operating segments, 1326–1328, 1347 Operations, 132n.2 Opinions of the Accounting Principles Board (APB Opinions), 9, 11 Options. see Stock options Optional straight-line method, 566 Option to purchase (franchises), 965 Oracle Corporation, 55, 378 Ordinary annuity, 281–283, 286 Ordinary stock dividends, 760 Original entry, book of, 69 Originating temporary difference, 1002 Other postretirement benefits (OPEB), 1055n.9, 1082n.22, 1084 Outdoor Channel Holdings, 592 Outflows, cash, 1274 Output in depreciation, 543 measures of, 939 Outstanding checks, 350 Outstanding stock, 750, 756n.11 Overfunded pension plans, 1070 Overhead, 492 Overseas National Airways, 760 Overstatement of accrued revenue, 1207 Overstatement of purchases, 1207 Owens Corning, Inc., 182 Owners’ equity. see Stockholders’ equity Ownership structure, 72 Oxford Industries, 1251 Ozanian, Michael K., 177, 539 Pacific Lighting, 558n.12 Pacter, Paul A., 1217n.15 Paid-in capital, 745, 765n.18 Paid-in capital in excess of par, 745 Pan American Airlines, 1078n.17, 1079 Panera Bread Company, 40 Paper checks, 349n.16 Parenthetical explanations, 194 Parking transactions, 388 Partial period depreciation, 548–549 Participating preferred stock, 754–755 Participating securities, 820n.21 Par value as basis for fair value, 746 of bonds, 692 of stock issued, 760, 763–764 Par value method, 751 Par-value stock, 745 Passage of title rule, 387 “Past event,” 1193n.3 Patents, business-method, 596 Paychex, 323 Payee, 331 Payment, date of (stock dividends), 758 Payout ratio, 767–768 Payroll deductions, 648 example of, 648 income tax withholding, 647–648 Social Security taxes, 646–647 unemployment taxes, 647 Payroll taxes, 648 PBGC. see Pension Benefit Guaranty Corporation PCAOB. see Public Company Accounting Oversight Board Pegg, Janet, 1015n.8 Penalty for failure to renew/extend lease, 1123 Penn Central Railroad, 641–642 Pensions, 264, 1320 Pension Benefit Guaranty Corporation (PBGC), 1048, 1053n.6, 1077–1079 Pension obligations, 1053–1054 Pension plan(s), 1050–1082 accounting for (see Pension plan accounting) actuaries’ role in accounting for, 1053 assets in, 1052n.4 defined-benefit, 1051–1052 defined-contribution, 1051 financial health of, 1069 funding of, 1050–1051 nature of, 1050–1052 net funded status of, 1055 reporting (see Pension plan reporting) stock market value of, 1051n.3 trends in, 1048–1049 worksheet for, 1058–1059 Pension plan accounting, 1053–1057 actual return on plan assets, 1057 actuaries’ role in, 1053 employer’s obligation in, 1053–1054 expense components in, 1055–1056 interest on liability, 1057 service cost in, 1056 Pension plan assets, actual return on, 1057 Pension plan gains/losses, 1063–1067 assets, smoothing unexpected gains/losses on, 1063–1064 calculations for, 1066–1067 corridor amortization, 1064–1065 example of unrecognized, 1065–1066 liability, smoothing unexpected gains/losses on, 1064 Pension plan reporting ERISA, 1076–1078 within financial statements, 1069–1079 within notes to financial statements, 1072–1074 terminations, pension, 1078–1079 2013 entries/worksheet example, 1075–1076 Pension poison pills, 1079n.20 Pension Protection Act, 1076n.15 Pension Reform Act (1974), 1076–1078 Pension terminations, 1078–1079 Pension worksheet, 1058–1059 amortization of unrecognized prior service costs, 1060–1061 gain or loss, 1063–1067 2010 entries, 1058–1060 2011 entries, 1062–1063 2012 entries, 1067–1069 2013 entries, 1075–1076 Pep Boys, 904 The Pepsi Bottling Group (PBG), 16 PepsiCo. Beverages, 35 PepsiCo, Inc., 35, 64, 127, 144, 172, 186, 257–258, 377, 484–485, 584, 607, 632–633, 641, 685, 738–739, 745, 791, 852, 856, 858, 927, 987, 1013–1015, 1017, 1045, 1111, 1239, 1308–1309, 1338–1340, 1377 PepsiCo. International, 35 Percentage analysis, 1354–1355 Percentage markup, 450n.11 Percentage-of-completion accounting method, 937–938, 946–947 Percentage-of-receivables approach, 328–330 Percentage-of-sales approach, 328 Performance approach, current operating, 140 Periods, compounding, 268 Period costs, 1331 interest as, 392 in inventory, 392 Periodic inventory system, 384–385 Periodic rent, 285–286 Permanent accounts, 69, 93 Permanent differences, 1002 Permits, 595 Perpetual inventory system, 383–385, 442 Petroleum Equipment Tools Inc., 512 Petty cash disbursements, imprest system for, 348–349 Petty cash funds, 320, 348–349 Pfizer Inc., 589 PharMor, 1315 Phillips, Michael M., 187 Physical factors, of depreciation, 541 Physical goods included in inventory, 386 consigned goods, 387–388 goods in transit, 387 and sales agreements, 388 Physical inventory count, 385 Pier 1 Imports, 204 Pillsbury, 1332 Pinnacle West Corporation, 1157 Pizza Hut, 962 Plant assets, 490 dispositions of, 511–512 and involuntary conversion, 512 problems with, 512 sale of, 511–512 Pledge, 338n.10 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 15. Index · I-15 Plugs, 598 PNC, 5, 1117 Points (note), 708 Polaroid, 595 Political costs, 1203 Politicization, 24 Polo Ralph Lauren, 744 Pools, 400, 401nn.7–8, 407n.13 Porter, J., 1313 Positive intent, 859 Postage stamps on hand, 320 Post-balance-sheet events (subsequent events), 1323–1324, 1347 Post-closing trial balance, 69, 94 Postdated checks, 320 Postemployment benefits, 648n.8 Posting, 76–80 closing entries, 93–94 defined, 69 Postretirement benefits, 264, 650n.9 disclosures of, 1090–1091 eligibility for, 1085n.26 obligations under, 1085 pension vs. healthcare, 1083–1084 Postretirement benefits accounting, 1082–1091 actuarial assumptions/conceptual issues of, 1091 costs, reporting, 1271 expense under, 1086 FASB on, 1082–1083 gains/losses recognition, 1088 illustrative entries of, 1086–1089 provisions of, 1084–1086 2011 entries and worksheet, 1087–1089 2012 amortization of unrecognized net gain/loss, 1089 Postretirement expense, 1086 Potlatch Corporation, 724 PPE. see Property, plant, and equipment Prab Command, Inc. (U.S.), 485 Prab Limited (U.K.), 485 Prab Robots, Inc., 485–486 Practice Bulletins, 12 Preemptive privilege, 803 Preemptive right, 743 Preferred dividends in arrears, 643 Preferred stock, 743, 745, 754–756, 831. See also Common stock; specific types, e.g.: Convertible preferred stock accounting and reporting of, 755–756 convertible, 798–799 convertible bonds vs., 755 dividends from, 812–813 features of, 754–755 participating, 754–755, 772n.23 redeemable, 755 Preferred stock outstanding, 754n.9, 756 Premier Parks, 542 Premiums, 657–658 Premium amortization, of bonds, 695–696 Premium bonds, 692–696 Prepaid expenses adjusting entries for, 82–83 on balance sheets, 184 basis of valuation of, 181 as class of adjusting entries, 81 decrease in, 1257 failure to record, 1206 increase in, 1254 as worksheet entry, 1278 Preparing financial statements, 91–92 Prepayments as class of adjusting entries, 81 in reversing entries illustration, 106–107 Present value, 262, 263 of annuity, 284–286 of annuity due, 283–286 of annuity due of 1 (table), 267 of an ordinary annuity, 284–285 of an ordinary annuity of 1 (table), 267 of benefits, 1054n.7 computing for unknown, 270–271 of deferred annuity, 287–288 measurement, 290–292 of 1 (table), 267 of ordinary annuity, 281–283 of single sum, 272–274 solving for, 270–271 as variable in compound interest, 270 Present value-based measurements, 264–265 Pretax financial income, 992, 1001–1004 Price index selection, 403–405 Priceline.com, 37, 932–933 PricewaterhouseCoopers, 99, 932n.1, 958, 1052, 1283 Prime Motor Inn, 203 Primerica (formerly American Can), 593 Principal, 265 Principal amount (bonds), 692 Principle-based accounting standards, rulebased vs., 15 Prior period adjustments, 147, 1197 Prior service costs (PSC), 1060–1061, 1086 Probability, degree of, 654 The Procter & Gamble Company, 63, 112, 127, 171–172, 193, 210–238, 257, 305–306, 376, 382, 484, 584, 588–589, 604, 632, 684, 738, 767, 790, 811, 852, 886n.12, 927, 987, 1044–1045, 1111, 1177, 1239, 1308, 1317, 1377 Product costs, 391–392 Product guarantees. see Guarantees Production variable method, 547 Profitability ratios, 208, 1350, 1351 Profit margin on sales ratio, 561 Progress Energy, 794 Projected benefit obligation, 1053–1057 Project financing arrangement, 710 Promissory note, 331 Property, goods, or services, 335 Property, plant, and equipment (PPE), 490 acquisition and valuation of, 490–498 analysis of, 560–561 on balance sheets, 185 and cost of buildings, 491–492 and cost of equipment, 492 and cost of land, 491 disclosure of, 1319 and interest costs during construction, 493–498 observations for, 498 presentation of, 559–560 and self-constructed assets, 492–493 valuation of, 498–507 Property dividends, 759 Property-rights approach, 1120, 1149 Proportional method, 746, 800–801 Proposed Statements of Financial Accounting Standards, 13 Pro rata portion, 492 Prorating, 699 Proved reserves, 557 PSC. see Prior service costs Public Company Accounting Oversight Board (PCAOB), 17, 1322n.5 Pulitzer Inc., 603 Pulliam, Susan, 381 Purchases, misstatement/overstatement of, 390–391, 1207 Purchase allowances, 456, 456n.13 Purchase commitments, valuation of, 446–448 Purchased goodwill, 598–599 Purchased intangibles, 590 Purchase discounts, 392–393, 456 Purchase returns, 456 Purchases-only-approach, 465n.2 Pure rate of interest, 291 Put option, 887n.15 Quaker Foods, 35 Quaker Oats Company, 1194, 1202 Quaker State Oil Refining Corp., 653 Qualcomm Inc., 595, 596, 762, 823 Qualified opinion, 1337 Qualified pension plans, 1050 Qualifying assets, 494 Quality of earnings, 133 Quality ratings (bonds), 694 Quanex Corporation, 189 Quantum Corporation, 343n.14 Quarterly financial statements, 96 Quest Company, 1087–1089 Questcor Pharmaceuticals Inc., 759 Qwest Communications, 506, 930, 932, 1150 R. G. Barry & Co., 74 R. J. Reynolds, 36 Rabigh Refining and Petrochemical Company, 741 Ranchers Exploration and Development Corp., 759 Rate of gross profit, 450n.11 Rate of interest, 270 Rate(s) of return, 388–389 on common stock equity, 767 on sales, 561 Rate of return on assets (ROA), 561 Ratios, 208. See also specific ratios, e.g.: Cash debt coverage ratio activity, 1350, 1351 coverage, 1350, 1351 liquidity, 1350, 1351 profitability, 1350, 1351 Ratio analysis, 208–209, 1350–1352 Raw materials inventory, 382 Raymark Corporation, 664 R&D. see Research and development (R&D) costs PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 16. I-16 · Index Reacquisition price, 701–702 Readily determinable fair value, 908 Real accounts, 69 Real economic loss, 1158n.22 Real estate investment trusts (REITs), 547n.7 Realizable revenues, 933 Realized revenues, 933 Really Useful Group, 595 Rearrangements, costs of, 510 Reasonableness test, 1196n.5 Receivables, 323–344. See also Accounts receivable(s) analysis of, 344 on balance sheets, 183 basis of valuation of, 181 classifying, 343 defined, 323 derecognizing, 345 disappearing, 749 impairment of, 352–356 presentation of, 343 with recourse, 340–341 sales of, 339–343 securitizing, 1251 trade, 323 without recourse, 340 Receivables turnover ratio, 344 Reclassification adjustments, 876–879 Recognized subsequent events, 1323 Reconciliation method. see Indirect method Reconciliation to international standards, 1357, 1360 Reconciling entry, final, 1280–1281 Reconciling items, 350 Record, date of (stock dividends), 758 Recourse defined, 339n.13 receivables with, 340–341 receivables without, 340 Recoverability tests, 552, 601–602 Recoverable reserves, 556 Recovery of investment test (90% test), 1122–1124, 1149 Recovery periods, 564 Redeemable preferred stock, 755 Reed, Jack, 337 Reeve, James M., 401n.6, 407n.13 Refinancing, 642 Refunding, 702 Regions Bank, 927 Registered bonds, 691 Registrars, 743 Reilly, David, 337 Reinstallation costs, 510 Reither, Cheri L., 877n.9 REITs (real estate investment trusts), 547n.7 Related-party transactions, disclosure of, 1321–1322 Relative sales value, 446 Reliance Power Ltd, 741 Rendleman, Richard, Jr., 802n.6 Rent-Way, Inc., 134 Repairs, 510–511 Replacements, 455n.12, 509 Reported amounts, 993–994 Reporting, 4, 1341–1346 change in entity, 1197 of change in principle, 1186–1187 of correction of error, 1197–1201 criteria for accounting/reporting choices, 1346 on financial forecasts/projections, 1341–1343 fraudulent financial reporting, 1344–1346 Internet financial reporting, 1343 requirements, 1315 Repossessions (installment sales), 953–954 Research and development (R&D) costs, 587–609 accounting for, 605–606 under contractual arrangements, 605n.13 of extractive industries, 605n.12 under GAAP/iGAAP, 612 identifying, 604–605 and investors, 609n.16 presentation of, 609, 611 Reserves, cookie jar, 134 Reserves errors, 1198 Residual interest, 744 Residual value, 1130, 1136–1141 guaranteed vs. unguaranteed, 1136 and lease payments, 1136–1137 lessee accounting for, 1137–1140 lessor accounting for, 1140–1141 meaning of, 1136 Restatement, 1199n.8, 1206 Restaurant chains, 1127–1128 Restoration costs, of depletion, 555 Restricted cash, 321 Restricted stock plans, 807–808 Restricted-stock units, 808n.10 Restrictions on retained earnings, 764–765, 1273 Restructuring, 145n.15, 717–722 continuation of debt, 718–722 settlement of debt, 717–718 Restructuring charge, 145 Retail inventory methods, 452–457 concepts of, 453 with conventional method, 453–456 evaluation of, 457 special items relating to, 456–457 Retail methods, 465–466 Retained earnings change in, 1258, 1277 disclosures of restrictions on, 764–765 illustration of statement of, 1276 increase in, 1255 reporting restrictions on, 1273 restrictions of, 152 restrictions on, 764–765 statement of, 97 on statement of stockholders’ equity, 152n.22 as worksheet entry, 1277 Retained earnings adjustment, 1192 Retained earnings statement, 152 Retired shares, 753 Retirement benefits. see Postretirement benefits Retirement of convertible debt, 798 Retrospective adjustment, 145 Retrospective changes in accounting principle, 1183–1190 accounting for, 1191 and equity method, 1197n.6 example of, 1188–1190 impracticability of, 1193–1194 reporting of, 1186–1187 Returnable cash deposits, 643–644 Reuters Group, 596 Revaluation model, 206 Revaluation surpluses, 769 Revell, Janice, 173 Revenue(s) on financial statements, 134 in income statement, 137 overstatement of accrued, 1207 understatement of unearned, 1206 Revenue bonds, 691 Revenue expenditures, 508–509 Revenue recognition, 930–966 after delivery, 948–959 for consignments, 965–966 current environment, 932–935 before delivery, 937–948 errors, 1198 for franchises, 962–965 at point of sale (delivery), 935–937 and SFAC No. 3, 933n.5 and SFAC No. 5, 933n.5, 933n.6, 937n.14, 948n.21–22 for special sales transactions, 962–966 Reverse stock splits, 63 Reversing differences, 1002 Reversing entries, 95, 105–110 Rhone-Poulenc Rorer (RPR), 433 Richard, Christine, 689 Richardson, A. W., 1145n.15 Right of return, 935 Risk, 178n.2 cash flow, 893 exchange rate, 890 interest rate, 890 Risk management (derivatives), 884–900 Rite-Aid, 17 RJR Nabisco, 690, 1331 ROA (rate of return on assets), 561 Rohde, L., 596 Romero, Simon, 1150 Royal Dutch/Shell, 557 Rule-based accounting standards, 15 Rural Electrification Corp, 741 Ryder System, 177 S. C. Johnson, 141 Sack, Robert J., 19, 1346 Safe harbor rule, 1342, 1343 Safeway, 452 St. Regis Pulp Co., 868–869 Sales with buyback agreement, 388 conditions for, 341 and FASB, 341 with high rates of return, 388–389 on installment, 389 with recourse, 340–341 secured borrowing vs., 341–342 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 17. Index · I-17 of treasury stock, 752–753 without recourse, 340–341 Sales agreements, 388–389 Sales discounts, 325–326, 456 Sale-leasebacks, 1157–1160 asset use determination in, 1157–1158 example of, 1158–1159 as term, 1157 Sales price of asset, 1142 Sales-type leases, 1131–1132, 1141–1145 Sales-warranty approach, 656–657 Sales tax payable, 645 Sales transactions, 934 Salvage value, 540, 1136n.13 Sampling, statistical, 385.1 Sandberg, Jared, 508 San Diego Gas and Electric (SDGE), 904 SARs. see Stock appreciation rights Sarbanes-Oxley Act of 2002, 1322, 1340, 1346 and auditing standards, 13 and “big GAAP versus little GAAP,” 1316n.3 and disclosure, 661 key provisions of, 17 revenue recognition, 932n.2 and SEC, 661 Section 404 of, 17 Sauter, Douglas, 13 Savings certificates, money-market, 320n.1 SBC Communications Inc., 1084 Schiesel, Seth, 1150 Schipper, Katherine, 1315n.2 Schneider, David, 489 Scholtes, S., 694 Scott, Richard A., 949n.23 Scott, Rita K., 949n.23 Scott Paper, 1158 Scribner, Edmund, 764n.17 Seaboard Corporation, 324 Searfoss, D., 1083n.25 Sears Holdings, 326, 385, 437, 452 Sears Roebuck, 326, 436, 1015 Seasonality, 1333–1334 SEC. see Securities and Exchange Commission Second income statement, 153 Secret reserves, 748 Secured bonds, 691 Secured borrowing, 338, 341–342 Securities, 858n.1 available-for-sale, 152n.21, 861–865, 868–870 disclosure for, 881 equity, 866–872 held-to-maturity, 859–861 holdings between 20% and 50%, 870–872 holdings of less than 20%, 867–869 holdings of more than 50%, 872 short-term available-for-sale, 1269 on statement of cash flows, 1246n.2 trading, 865–866, 870, 1269 Securities and Exchange Commission (SEC), 26 and American Institute of Certified Public Accountants, 7 on cash flow classification, 1266 and Caterpillar, 1325 on differential disclosure, 1315 and earnings management, 133 enforcement by, 8–9 and FASB, 8, 8n.6 and GAAP standards development, 8 IDEA database, 1344 on interim reporting, 1334–1335 as IOSCO member, 1358 and management’s responsibilities for financial statements, 1340 on MD&A, 1338 and off-balance-sheet financing, 710 in private sector, 8 and Sarbanes-Oxley Act of 2002, 661 on timeliness of information, 1335 Securities Fair Value Adjustment account, 863 Securitization, 283, 339, 341, 353 Securitizing receivables, 1251 Segment disclosures, 1325–1329 disadvantages of, 1325–1326 identifying operating segments for, 1326–1328 illustration of, 1329 measurement principles for, 1328 objectives of, 1326 principles of, 1326 types of information in, 1328–1329 Self-insurance, 661–662 Sender, Henny, 204, 506 Senyak, C., 1015n.8 Sepracor, Inc., 838 September 11, 2001 terrorist attacks, 12 depreciation measures taken after, 564n.1 effect on airlines, 178 reporting extraordinary items after, 143 Serial bonds, 691 Service costs, 1056, 1086 Service lives, 541 Service period, 805 Service revenue, 102–103 Settlement of debt, 717–718 7-Eleven Stores, 962 Seven Bank Ltd, 741 75% test, 1122 Sewer, Andy, 744 Shares, reacquisition of, 749–753 Share price appreciation, 827 Share system, 742–743 Shatner, William, 932 Shaustyuk, K., 823 Sherwin-Williams Company, 258 Short, Daniel G., 408n.17, 410n.22 Short account, 348 Shortages, normal/abnormal, 456 Short-term available-for-sale securities, 1269 Short-term borrowing, 322 Short-term creditors, 1349 Short-term financing, 326n.4 Short-term investments, 181–183 Short-term nontrade notes payable, 1269 Short-term obligations, 641n.5 Short-term paper, 320n.1 Short-term receivables, 323 Showa Shell Sekiyu, 886n.12 Shwiff, K., 1144 Sick pay, 649 Sidel, Robin, 187 Siebel Systems, 1315 Significant influence, 870 Significant noncash activities, 201–202 Significant noncash transactions, 1272–1273 Simple capital structure EPS, 812–816, 824 complex vs., 812–813 comprehensive example of, 815–816 preferred stock dividends, 812–813 stock dividends/stock splits, 814–815 weighted-average number of shares outstanding, 813–814 Simple interest, 266 Simpson, Glenn, 991 Single-period statements, correcting errors on, 1200 Single-step income statements, 135–136 Single sum future value of, 271–272 present value of, 272–274 Single-sum problems, 270–275 and future values of an annuity due, 278–281 and present value of annuity due, 283–286 and present value of ordinary annuity, 281–283 solving for unknown in, 274–275 Skinner, D. J., 1011 Small stock dividends, 761, 761n.15 Smart Choice Automotive, 1202 Smith, Alison, 451 Smooth earnings, and change in accounting method, 1203 Smoothing unexpected gains/losses, 1063–1064 Social Security, 267, 646–647 Soft assets, 5 Software costs, 608 accounting for, 614–617 capitalized, 615–616 reporting, 616 Software industry, 614n.17 Solectron Corporation, 55 Solomon, Deborah, 508 Solvency, 179, 199 Solvency ratios, 1350n.28 Sonic Foundry Corporation, 299 SOP (Statements of Position), 12 SoRIE (Statement of recognized income and expense), 769 Sotheby’s Holdings, 387 Sougiannis, Theodore, 609n.16 Southern California Edison, 755 Southwest Airlines, 85, 488–489, 510–511, 885, 1048, 1114, 1115, 1178, 1244 SPEs. see Special purpose entities Special assessments, 491 Special journals, 76 Special purpose entities (SPEs), 342–343, 709–710, 902, 1115 Specific-goods LIFO approach, 400–401 Specific-goods pooled approach, 401–406 Specific-goods pooled LIFO approach, 400–401 Specific identification, 868n.6 Specific indexes, 403n.9 Specific items, 148 Speculators, and derivatives, 885 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 18. I-18 · Index Sprint Nextel, 633 Staff positions, 11 Standard account form, 76 Standardized cost system, 445n.4 Standard & Poor’s Corporation, 694 Standards-setting government intervention in, 27–28 international, 1356–1360 in political environment, 15–17 Stanga, Keith G., 401n.6, 407n.13 Staples, 439 Starbucks Corp., 55, 490, 859, 911, 1116, 1129 Start-up costs, 606–607 State corporate law, 742 Stated interest rate, 331n.9 Stated rate, 269, 692 Stated value method, 751 Statement of cash flows, 69, 197–205 classification of cash flows on, 1245–1247 content and format of, 198–199 format of, 1247 GAAP/iGAAP standards, 1283 purpose of, 197–198, 1244 usefulness of, 203–204, 1244 Statement of cash flows preparation, 200–202, 1247–1282 and accounts receivable (net), 1267–1269 and adjustments similar to depreciation, 1266–1267 and extraordinary items, 1271–1272 final, 1282 and gains, 1270 indirect vs. direct method in, 1259–1266 and net losses, 1269–1270 and postretirement benefit costs, 1271 and significant noncash transactions, 1272–1273 sources for information used on, 1259 steps in, 1247–1248 and stock options, 1270–1271 2009 example of, 1248–1252 2010 example of, 1253–1255 2011 example of, 1255–1258 and working capital changes, 1269 worksheet used for (see Statement of cash flows worksheet) Statement of cash flows worksheet, 1273–1282 accounts receivable (net), 1277 building depreciation and amortization of trademark, 1279 change in retained earnings, 1277 common stock/related accounts, 1280 equipment and accumulated depreciation, 1279 final reconciling entry, 1280 guidelines for using, 1274 illustration of completed, 1281 inventories, 1278 investment in stock, 1278 land, 1278 noncash charges/credits, 1280 prepaid expense, 1278 preparing, 1275–1277 reasons for using, 1273–1274 Statements of Financial Accounting Concepts, 12 No. 1, 1314, 1339 No. 3, 933n.5 No. 5 (“Recognition and Measurement in Financial Statements of Business Enterprises”), 141n.12, 709, 933n.6, 935n.11, 937n.14, 948n.21–22 No. 6 (“Elements of Financial Statements of Business Enterprises”), 135n.7, 700n.5, 709, 744 Statements of Financial Accounting Standards, 11, 26, 1148–1150 FASB Standards Statement, 11 No. 6 (“Elements of Financial Statements”), 1083n.23 No. 13 (“Accounting for Leases”), 1129n.10, 1145, 1151 No. 34 (“Capitalization of Interest Cost”), 495n.3 No. 58 (“Reports on Audited Financial Statements”), 1202n.10 No. 109 (“An Empirical Investigation of Its Incremental Value-Relevance Relative to APB No. 11”), 996 No. 114 (“Accounting by Creditors for Impairment of a Loan”), 718n.15, 718n.16 No. 128 (“Earnings Per Share”), 820n.17 No. 130 (“Reporting Comprehensive Income”), 766n.20, 908 No. 133 (“Accounting for Derivative Instruments and Hedging Activities”), 900 No. 145 (“Recission of FASH Statements No. 4, 44, and 64, and Technical Corrections”), 702n.9 Statement of financial position, 178. See also Balance sheet(s) Statement of recognized income and expense (SoRIE), 155, 769 Statement of retained earnings, 97 Statement of stockholders’ equity, 152n.22, 153–154, 766 Statement on Auditing Standards No. 54 (“Illegal Acts by Clients”), 1322n.7 No. 58 (“Reports on Audited Financial Statements”), 1335n.13 No. 99 (“Consideration of Fraud in a Financial Statement Audit”), 1322n.5, 1346n.27 No. 101 (“Interim Financial Information”), 1335n.11 Statements of Position (SOP), 12 Statistical sampling, 385.1 Stauffer Chemical Company, 406 Stead, D., 1321 Sterling Construction Corp., 1124–1127, 1130, 1132–1134, 1136–1141, 1144–1146 Sternstein, Aliya, 1315n.1 Stickney, Clyde P., 1243 Stires, David, 811 STMicroelectronics (STM), 799 Stock. See also specific types, e.g.: Preferred stock buybacks (see Buyback(s)) change related to investment in common, 1267 costs of issuing, 748 dividend distributions, 757 issuance of, 501, 745 issuance of, below par value, 745n.3 issuance of, in noncash transaction, 747–748 issuance of, with other securities, 746–747 rights and privileges of, 742–743 as worksheet entry, 1280 Stock appreciation rights (SARs), 827–829 equity awards, 827 example of, 828–829 liability awards, 827–828 Stock-based compensation plans, 803–811 accounting for, 811 debate over stock option accounting, 809–811 disclosure of, 09 employee stock purchase plans, 808–809 and fair value, 265 reporting issue with, 804–805 restricted-stock, 807–808 stock appreciation rights, 827–829 Stock dividends, 643, 760–761, 761n.15 in EPS computation, 814–815 and par value, 763–764 reporting, 1273 stock splits vs., 763–764 Stockholders, 743, 1349 Stockholders’ equity, 72, 189, 740–768 analysis of, 767–768 on balance sheet, 765–766 and corporate capital, 744–753 in corporation, 742 presentation of, 765–766 and SFAS No. 6, 744n.2 statement of (see Statement of stockholders’ equity) Stock investment, as worksheet entry, 1278 Stock markets, 1316 Stock options, 803, 1270–1271 in diluted EPS computation, 819–820 errors in, 1198 reduced use of, 794–795 Stock right, 743n.1, 803 Stock splits, 762–763 in 1990s, 763 in EPS computation, 814–815 reporting, 1273 reverse, 763 stock dividends vs., 763–764 Stock warrants, 743n.1, 799–803 conceptual questions regarding, 802 in diluted EPS computation, 819–820 incremental method, 801 issued with other securities, 800 proportional method, 800–801 rights to subscribe to additional shares, 803 Storey, Reed K., 32n.1 Storey, Sylvia, 32n.1 Stott, David, 547n.7 Straight-line amortization, 1061 Straight-line method for depreciation, 543–544 Strand, W. K., 541n.1 Strict cash basis, 101 Strike price, 887 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 19. Index · I-19 Stroh’s Brewery Co., 1078 Stuart, A., 131 Study Group on Establishment of Accounting Principles, 9 Subprime mortgage crisis, 342–343, 353–354 Subsequent events. see Post-balance-sheet events Subsequent events (post-balance-sheet events), 1323–1324 Subsidiary ledger, 69 Substitution approach, 509–510 Successful-efforts concept, 557–558 Sullivan, Scott, 26–27 Summary of Significant Accounting, 192 Summers, Lawrence, 18 Sum-of-the-years’-digits method, 544 Sunbeam, 17, 49, 937, 1202 Sunder, Shyam, 409n.20 Sunshine Mining, 32, 691 SunTrust Banks, 5, 17, 330 Supersession, 541 SUPERVALU Inc., 433 Supporting schedules, 196 Sweden, 1122 Swensen’s, Inc., 963n.30 Swieringa, R. J., 1145n.15 Switzerland, 1122 Synthetic lease, 1115, 1118 T-account, 75 Taco Bell, 193 Take-or-pay contract, 710 Takeover protection covenants, 797n.2 Tangreti, Robert, 1346 Target Corporation, 56, 198, 326, 330, 385, 436, 438, 452, 462, 490, 569, 1184 Tastee Freeze, 962 Tasty Baking Company, 1147, 1178 Taxes. See also Income taxes, accounting for corporate, 646n.6 disclosure of, 1320 employer payroll, 648 errors in, 1198 and leasing, 1130 Social Security, 646–647 unemployment, 647 Taxable amounts, 994 Taxable income, 992–993, 1001–1004, 1018 Taxable temporary differences, 1001, 1018 Tax depreciation, book depreciation vs., 566–567 Tax-planning strategy, 1018 Tax rates, 1004–1005 Tax Reform Act of 1986, 564 TCBY, 962 Technological feasibility, 615, 617 Technology-related intangible assets, 595–597 Teco Energy, 177 Temporary accounts, 93 Temporary differences, 993, 1001–1002, 1018 examples of, 1003–1004 originating, 1002 originating/reversing aspects of, 1002 and SFAS No. 6, 996 Tenet Healthcare, 319 Tenneco, Inc., 800 Tergesen, Ann, 751, 1251 Term bonds, 691 Terminations, pension, 1078–1079 Texaco, 329 TGI Friday’s, 962 TGK-7 (Volzhskaya TGK), 741 TheStreet.com, 689 Third-party guarantors, 1123, 1149 3M, 767 Three-column form of account, 77 Timberland, 177 Time diagram, 270 Timelines, 5 Times interest earned ratio, 713 Time value concepts, 264–270 applications of, 264–265 and compound interest, 266–269 and interest, 265 and simple interest, 266 variables fundamental to, 270 Timex, 438 Timmons, H., 694 T J International, 431–432 Tomkins PLC, 260 Tootsie Roll Industries, 173, 560–561, 759, 1090–1091, 1317–1319, 1330 Total comprehensive income, 766n.20 Townsend, Leah, 17n.12, 68n.1 Toyota, 132, 595 Toys R Us, 1244 Trade accounts payable. see Accounts payable(s) Trade accounts receivable, 336 Trade discounts, 324–325 Trade loading, 936 Trademark (trade name), 593, 1279 Trade notes payable. see Notes payable Trade receivables, 323 Trading, 182 debt securities, 859 on the equity, 767 Trading securities, 865–866, 870, 1269 Traditional LIFO, 399 Transactions, 68, 75 and cash flows statement, 1248 identifying and recording, 73–75 Transaction approach, 134 Transfer agents, 743 Transfers between investment categories, 879 Transfer of ownership test, 1121 Transfers-in, 456 Transwitch, 444 Travel advances, 320 Treasury bills, 320n.1 Treasury stock (shares), 750 acquisitions of, 751n.8 as assets, 750n.6 buyback of, 756n.11 and capital stock, 750 cash dividends on, 759 under GAAP and iGAAP, 769 purchase of, 751–752 retiring, 753 sale of, 752–753 Treasury-stock method, 820, 831 Trial balance, 63, 80–81. See also specific types, e.g.: Adjusted trial balance Trial balance columns, 108 Triggers, debt-rating, 1321 Triple smoothing, 1067 Troubled debt accounting for, 716–722 restructuring, 717–722 True-Value Hardware, 452 Trump Hotels & Casino Resorts (DJT), 823 Trusts, 1051, 1052 Trustees, 1051 Tucker, Reed, 597 Turner, Lynn, 749 Turner, Ted, 750 Turnover ratios, 1350n.28 TWA, 1079 Twarowski, C., 1343n.22 Tweedie, Sir David, 1347 Two-class common shares, 820n.21 TXU Corp., 1116 Tyco International, 1321n.4, 1345 UAL, Inc., 1178 Unamortized bond issue costs, 700 Uncertain tax positions, 1016–1017, 1019 Uncollectible accounts receivable, 326–331, 953 Underfunded pension plans, 1054, 1070, 1078n.16 Understatement of unearned revenue, 1206 Underwriters Labs Inc., 1195 Unearned revenues, 644 adjusting entries for, 85–86 as class of adjusting entries, 81 understatement of, 1206 Unemployment taxes, 647 Unexpected (deferred) asset gain or loss, 1066 Unfiled suits, 654 Unguaranteed residual value, 1123 in lessee accounting, 1138–1140 in lessor accounting, 1140–1141 for sales-type lease, 1143, 1144 Uniform Commercial Code, 743 Uniform Stock Transfer Act, 743 Union Planters, 927–928 Uniroyal Technology Corporation (UTC), 258 Unisys Corp., 1064 Unit approach, and Accounting Standards Executive Committee (AcSEC), 547n.6 United Airlines, 178, 658, 716, 885, 1048, 1079, 1114, 1115 United Kingdom, 1342, 1357–1360 United Parcel Service (UPS), 36, 552 United States aging population of, 1053 standards in, 1357, 1360 United States Steel, 742 Unit LIFO, 399 Units-of-production approach, 555 Universal Pictures, 1325 Unqualified opinion, 1337 Unrealized holding gain, 336 Unrealized holding loss, 336 Unrecognized gains/losses in pension plan, 1065–1066 in postretirement benefits, 1089 Unsecured bonds, 691 Unusual gains or losses, 144–145, 148 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark
  • 20. I-20 · Index Upper (ceiling), 439–440 UPS Capital, 1117 Upton, Wayne, Jr., 179n.5 US Airways, 178, 1079 USX Corp., 329 Valuation of accounts receivable, 326–331 of inventories, 386, 445–448 at net realizable value, 445 of notes receivables, 335–336 and purchase commitments, 446–448 and SFAS No. 157, 500n.4 using relative sales value, 446 Valuation allowance, 1010–1011, 1018 for deferred tax asset, 999–1000 evidence for, 1010–1011 loss carryforward with, 1009–1010 loss carryforward without, 1008–1009 Vames, Steven, 643, 689 The Vanguard Group, 692 Variable-interest entities (VIEs), 902–904 Variable-rate mortgage, 709 Varshney, A., 1116 Vatter, William J., 326n.5 Verifiable benchmark, 42 Verity, Inc., 1011 Verizon Communications Inc., 1084 Vermont Teddy Bear Co., 1309 Vertical percentage analysis, 1354 Vested (term), 805n.8 Vested benefits, 1053, 1055 Vested rights, 649 Viacom Inc., 1116 Vickrey, Don, 761n.15 VIEs. see Variable-interest entities Vincent, Linda, 547n.7 VISA, 338, 339n.12, 741 Vishay Technologies, 444 Visteon, 17 Vivendi Universal Entertainment, 1325 Vodafone/Mannesmann, 20, 1356 W. R. Grace, 40, 134 W. T. Grant Company, 198, 203, 1243, 1273 Wachovia, 809 Wages, failure to record accrued, 1206 Walgreen Co., 55, 82, 112, 172, 180, 387, 748, 1129 Wallman, Steven H., 40n.10 Wal-Mart, Inc., 64, 236, 301, 382, 386, 436, 452, 462, 470, 488–489, 491, 645, 749 Walt Disney Company, 35, 591, 594, 744 Want Want China Holdings, 741 Warrants. see Stock warrants Warranties, 655–657. See also Guarantees accrual method for, 655 cash-basis method for, 655 tax deduction for, 997 Washington Mutual, 633 The Washington Post, 809, 811 Waste Management, 538 Watered stock, 748 Watts, Ross L., 1203n.11 Webber, Andrew Lloyd, 594 Webber Inc., 416 Weber, R. P., 1015n.7 Webvan, 763 Weighted-average accumulated expenditures, 494–495, 495n.3 Weighted-average method, 395 Weighted-average number of shares outstanding, 813–814, 830 Weil, J., 49, 140, 319, 603, 749, 865, 999 Weirton Steel, 1079 Welch, David, 1049 “Welfare benefits,” 1082 Wells Fargo, 1117 Western Airlines, 1078 Westinghouse Electric Corporation, 987 Weyerhaeuser Company, 143, 184, 447 Wheat, Francis, 9 Wheat Committee, 9 Wheeler, J. E., 1015n.7 Wherehouse Entertainment Inc., 797n.2 Whole Foods Market, 1129 WHX Corporation, 547 Wiebold, Incorporated, 791 Wilbert, James, R., 1086n.27 Willamette Industries, 195, 551 Williams Companies, 710 Williams-Sonoma Inc., 904 William Wrigley Jr. (company), 438 Wingfield, Nick, 593n.3 Wolverton, Troy, 811 Working capital, 187, 1269 Working capital ratio, 665 Work in process inventory, 382 Worksheet(s) adjustments entered on, 108–109 pension (see Pension worksheet) preparation of, 110 statement of cash flows (see Statement of cash flows worksheet) WorldCom, 2, 17, 26–27, 204, 508, 1315, 1345 Wright, David W., 1352n.30 Write-offs, 140–141, 538–539, 999 Written off, accounts receivable, 330–331 XBRL (extensible business reporting language), 1343 Xerox, 17, 331, 595, 1144, 1273 Yahoo, Inc., 47, 55, 323, 795, 1006, 1015, 1016 Year-end-adjustment, expenses subject to, 1332 Years-of-service amortization, 1060–1061 Young, S., 937 Zeff, Stephen A., 17n.10, 761n.14 Zero-interest-bearing notes, 331–333, 640–641, 704–705 Zero-interest debenture bonds, 691 Zimmerman, Jerold L., 1203n.11 Zion, David, 564n.1, 1069, 1116 Z-scores, 191 Zuckerman, G., 703 PDF Watermark Remover DEMO : Purchase from www.PDFWatermarkRemover.com to remove the watermark