Fin Act 1 Financial Accounting and Reporting Part 1 Revised

FAR EASTERN UNIVERSITY Manila Institute of Accounts, Business and Finance COURSE SYLLABUS Course Code

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FIN ACT 1

Course Title

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Financia Financiall Accountin Accounting g and Report Reporting, ing, Part Part I

Course Pre-requisite

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FND ACT ACT 2 – Fundamen Fundamentals tals of Accou Accountin nting g , Part II

Course Credit

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Six Six (6) (6) unit units s

Course Description

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This course introduces introduces the nature, nature, functions, functions, scope and limitations limitations of the broad field field of accounting theory. theory. It deals with the the study of the theoretical accounting framework objectives of financial statements, accounting conventions, and generally accepted accounting principles, standard setting process for accounting practice, national as well as international principles relating to the preparation and presentation of financial statements, the conditions under which they may be appropriately applied, their impact or effect on the financial statements; and the criticisms commonly leveled against them. The course covers the detailed discussion, appreciation, and application of accounting principles covering the assets, financial and nonfinancial. nonfinancial. Emphasis is given on the interpretation interpretation and application of theories of accounting in relation to cash, temporary investments, investments, receivables, inventories, prepayments, long term investments, investments, property, plant and equipment, intangibles, and other assets, including financial statement presentation and disclosure requirements. The related internal control, ethical issues, and management of assets are also covered. Exposure to computerized system in receivables, inventory, and lapsing schedules is a requirement requirement in this course.

General Course Objectives

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At the end of the the course, the student is expected expected to be able to obtain a comprehensive comprehensive knowledge knowledge and and understanding understanding on selected pronouncements of the Accounting Standards Council (ASC) as embodied in the PAS and principles underlying measurement, valuation and presentation and disclosure of ASSETS.

Revised as of May 2009

COURSE CONTENT Week

Learning Objectives

1

A t t he e nd of th e se ss ion, the s tu den t i s expected to understand: Know the requirements for completing the course successfully;  Articulating his/her own expectation from the course and the professor  Nature, principles and scope of  accounting Nature, principles and objectives of  financial and related records of an organization The nature, role and significance of  accounting theories and principles Principles of conceptual framework of  accounting Philippine financial reporting standards/Philippine accounting standards The concept and role of the true and fair  presentation of financial statements A t t he e nd of th e se ss ion, the s tu den t i s expected to understand: •

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•

•

Focal Points/Topics 1. Overview of the course 2. Administrative matters 3. Co ncepts and principles relating to the preparation and presentation of  Financial Statements.

Competencies

Teaching Strategies

Values

Planning and Organizing Understanding

1. Expectation setting for both students and professor; 2. Formulation of the seat plan 3. Lectures 4. Assignments

Teamwork Cooperation

Judgment Understanding

1. Lectures 2. Assignments

Flexibility

Evaluative Measures 1. Seat Plan 2. Summarized student expectation sheet 3. Quiz

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2

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Financial Reporting standards Council (Creation, objectives and functions; Membership/composition; Standard setting process)

Financial Reporting Standards Council and Conceptual Framework for the Preparation and Presentation of  Financial Statements

Revised as of May 2009

1. Quiz

Week

Learning Objectives •

3

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•

Competencies

Teaching Strategies

Values

Evaluative Measures

Flexibility Creativity  Accountability

1. Preparation of  Financial Statements 2. Quiz

The IASB, history, current structure and processes, globalization of capital markets, calls for the harmonization of  accounting standards, formation and achievements of the IASC

A t t he e nd of th e se ss ion, the s tu den t i s expected to understand: •

Focal Points/Topics

Users and their information needs Objective of financial statements Underlying assumptions in the preparation of financial statements Qualitative characteristics of financial statements (Understandability, Relevance, Reliability, Comparability) Principles of Recognition and Measurement (Measurement basis) Elements of financial statements and their definition (Assets, Liabilities, Equity, Income, Expenses) Recognition and measurement of the elements of financial statements Concepts of capital and capital maintenance ( Financial concept, Physical concept)

Conceptual Framework for the Preparation and Presentation of  Financial Statements

Judgment Understanding Presentation Skills

Revised as of May 2009

1. Lectures 2. Assignments

Week 4

Learning Objectives A t t he e nd of th e se ss ion, the s tu den t i s expected to understand:

Focal Points/Topics Introduction to Financial Instruments

Definition of financial instruments [ Financial assets: nature and examples, Financial liabilities: nature and examples, Equity instruments: nature and examples ( Distinction between equity and financial liabilities), Compound financial instruments] Categories of financial assets/financial liabilities Financial assets covered by Pas 32 & 39 Other financial assets excluded from the scope of Pas 39 and addressed under  other PFRS  Approach in accounting for financial instruments Nonfinancial assets/nonfinancial liabilities: nature and examples A t t he e nd of th e se ss ion, the s tu den t i s expected to understand:  Accounting for Cash Definition, nature and composition of  cash and cash equivalents Recognition and measurement of cash Management and control of cash (Accounting of petty cash fund, Bank reconciliation at a single date) Financial statement valuation, presentation and disclosure Learning Objectives Focal Points/Topics •

Competencies

Teaching Strategies

Values

Evaluative Measures 1. Quiz 2. I nternet works

Understanding  Analytical Ability Decision Making Skills

1. Lectures 2. Assignments

 Accountability Flexibility Patience

 Analytical Ability Problem Solving Skills Presentation Skills

1. Lectures 2. Illustrative problems 3. Board work 4. Assignment

Honesty Integrity Fairness  Accountability

1. Preparation of  Bank Reconciliation 2. Quiz

Values

Evaluative Measures

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5

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Week

Revised as of May 2009

Competencies

Teaching Strategies

6 7

A t t he e nd of th e se ss ion, the s tu den t i s expected to understand: •

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8

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Definition, nature and classification of  receivables  Accounting for receivables [Recognition, Initial and subsequent measurement, Impairment and uncollectible of  receivables (Assessment and recording of impairment loss, Reversal or recovery of impairment loss), De-recognition, Generating cash from receivables]  Accounting for notes/loans receivable (Definition and types of promissory notes, Recognition, Initial Measurement and valuation at present value)

First Preliminary Examination  Accounting for   Analytical Ability Receivables Problem Solving Skills Presentation Skills

 Accounting for  Receivable financing arrangements Receivables (cont’d) [Accounts Receivable, Pledging (general assignment of receivables), Factoring,  Assignment of specific receivable]: Notes receivable (Discounting)] Notes/loans receivable impairment and un-collectibility Financial statement presentation and disclosure Internal control measures for receivable

 Analytical Ability Problem Solving Skills Presentation Skills

Revised as of May 2009

1. Lectures 2. Illustrative problems 3. Board work 4. Assignment

Honesty Integrity Fairness  Accountability

1. Quiz

1. Answering assignments 2. Lectures 3. Board work 4. Giving assignment

Honesty Integrity Fairness  Accountability

1. Quiz 2. Case Study

Week 9

Learning Objectives

Focal Points/Topics A t th e e nd o f t he s es si on , t he st ude nt is  Accounting for  expected to understand: Investments in Equity and Debt Investment in equity instruments covered Instruments including basic by Pas 32 and 39 [Investment in concepts on marketable equity securities (designated Derivatives (covered at fair value through profit or loss, Trading, available for sale), Investment in by Pas 32 and 39) unquoted equity securities] Investment in debt instruments [Held-tomaturity investments, not held-to-maturity (Trading, Available-for-sale)] •

Competencies

Teaching Strategies

Values

 Analytical Ability Problem Solving Skills Presentation Skills

1. Answering assignments 2. Lectures 3. Board work 4. Giving assignment

Honesty Integrity Fairness  Accountability

 Analytical Ability Problem Solving Skills Presentation Skills

1. Lectures 2. Illustrative problems 3. Board work 4. Assignment

Honesty Integrity Fairness  Accountability Commitment

Evaluative Measures 1. Internet works 2. Quiz

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10

A t th e e nd of the ses si on , t he st ude nt is expected to understand: •

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Definition, nature and classes of  inventories Recognition Initial measurement at cost Inventory recording systems (Periodic inventory system, Perpetual inventory system) Inventory costing methods (Items not ordinarily interchangeable: Specific identification; For items that are interchangeable: First in, First out method, Weighted average cost method)

 Accounting for  Inventories

Revised as of May 2009

1. Quiz 2. Internet works

Week 11

Learning Objectives •

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12 13

A t th e e nd of the ses si on , t he st ude nt is expected to understand: • • • •

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Week

Inventory estimation methods [Gross profit method, Retail inventory method (excluding peso value and retail info)] Valuation at lower of cost and net realizable value (Write down to net realizable value, Reversal of write-down) Other inventory issues (Purchase commitment, Inventory valued at selling price, Use of more than one cost method, Borrowing costs, Lump-sum acquisition, Inventory errors) Financial statement presentation and disclosures Internal control and management of  inventory

Definition, nature and classes Recognition Initial measurement at cost Valuation at lower of cost and net realizable value (Write-down to net realizable value, Reversal of write-down) Financial statement presentation and disclosures Learning Objectives

Focal Points/Topics  Accounting for  Inventories (cont’d)

Competencies  Analytical Ability Problem Solving Skills Presentation Skills

Second Preliminary Examination  Accounting for   Analytical Ability agricultural activities Problem Solving and biological assets Skills Presentation Skills

Focal Points/Topics

Competencies

Revised as of May 2009

Teaching Strategies

Values

1. Answering assignments 2. Lectures 3. Board work 4. Giving assignment

Honesty Integrity Fairness  Accountability Commitment

1. Lectures 2. Illustrative problems 3. Board work 4. Assignment

Honesty Integrity Fairness  Accountability Innovation

Teaching Strategies

Values

Evaluative Measures 1. Quiz

1. Quiz 2. Case Study

Evaluative Measures

14

A t th e e nd of the ses si on , t he st ude nt is expected to understand: • • •

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Definition, nature and classes Recognition Initial measurement (Cash purchase, Purchase on a deferred payment contract, Issuance of securities, Donation or discovery, Self-construction, Exchanges of non-monetary and monetary assets) Expenditures subsequent to acquisition Valuation or measurement subsequent to initial recognition (Benchmark methodcost less accumulated depreciation and accumulated impairment losses; allowed alternative method- revaluation at fair  value less accumulated depreciation and accumulated impairment losses Depreciation of assets (Definition, nature and causes; Factors affecting depreciation; methods of depreciation ( Straight-line method, Declining balance method, Sum-of-the-years digits method, Group and composite depreciation) Depletion of wasting assets

 Accounting for  Property, Plant and Equipment

 Analytical Ability Problem Solving Skills Presentation Skills

Revised as of May 2009

1. Lectures 2. Illustrative problems 3. Board work 4. Assignment

Honesty Integrity Fairness  Accountability Innovation

1. Quiz

Week

Learning Objectives

15

 Accounting changes affecting depreciation Revaluation of property, plant and equipment (Recording on date of  revaluation, Frequency of revaluation, Revaluation increase, Revaluation decrease, realized revaluation) Impairment of assets (Definition, when to recognize and how to measure impairment loss, measurement of  recoverable amount, impairment loss for  an individual asset, Impairment loss for  cash-generating unit, Reversal of  previously recognized impairment loss) Retirement and disposals Financial statement presentation and disclosures Internal control and management of  property, plant and equipment A t th e e nd of the ses si on , t he st ude nt is expected to understand: •

•

Focal Points/Topics  Accounting for  Property, Plant and Equipment (cont’d)

Competencies

Teaching Strategies

Values

Evaluative Measures 1. Quiz 2. Case Study

 Analytical Ability Problem Solving Skills Presentation Skills

1. Answering assignments 2. Lectures 3. Board work 4. Giving assignment

Honesty Integrity Fairness  Accountability Innovation

 Accounting for  Intangible Assets

 Analytical Ability Problem Solving Skills Presentation Skills

1. Lectures 2. Illustrative problems 3. Board work 4. Assignment

Honesty Integrity Fairness  Accountability Innovation Transparency

1. Quiz 2. Internet works

Focal Points/Topics

Competencies

Values

Evaluative Measures

•

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16

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Week

Definition, nature and classes Recognition criteria Initial measurement and accounting for  intangibles (Patents, Copyright, Trademarks and trade names, Franchise rights, Lease rights, Computer software, goodwill, Research and development costs, Other intangible assets) Learning Objectives

Revised as of May 2009

Teaching Strategies

Subsequently incurred costs Measurement subsequent to initial recognition (Cost method, Revaluation method)  Amortization Impairment of value of intangible assets Reversal of impairment loss Retirements and disposition Financial statement presentation and disclosures Internal control measures for intangibles A t th e e nd of the ses si on , t he st ude nt is expected to understand: • •

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17

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Investment in cash surrender value of life insurance Investment in funds Investment property Interest in joint ventures* Interest in associates* Investment in subsidiary*

*Detailed discussion covered in Advanced   Accounting subjects 18

1. Accounting for  Other Types of  Investments

 Analytical Ability Problem Solving Skills Presentation Skills

2. Accounting for  Noncurrent Assets Held for sale Final Examination

Revised as of May 2009

1. Lectures 2. Illustrative problems 3. Board work 4. Assignment

Honesty Integrity Fairness  Accountability Innovation Transparency

1. Quiz

Textbook: Financial Accounting Volume 1 by Conrado Valix and Jose Peralta, 2008 References: Books: Financial accounting : tools for business decision making. Kimmel, Paul. 2010 Financial accounting : a global approach. Monger, Rod. 2010 Financial accounting : volume two. Valix, Conrado T. 2010 Financial accounting. Vol 1. Valix, Conrado T. 2010 Financial accounting : volume three. Valix, Conrado T. Valix, 2009 Financial accounting. Albrecht, W. Steve. 2008 Financial accounting : a business process approach. Reimers, Jane L. 2008 Financial accounting. Harrison, Walter T. 2008 Financial accounting. Williams, Jan R. 2008 Financial accounting and reporting. Whittington, O. Ray. 2008 Financial accounting and reporting. Elliott, Barry. 2008 Financial accounting. Needles, Belverd E. 2007 Financial accounting : a user perspective. Albright, Thomas L. 2007 Financial accounting. Libby, Robert. 2007 Financial accounting : instructors solutions manual. Needles, Belverd E. 2007 Financial accounting. Vol. 2. Valix, Conrado T. 2007 Financial accounting. Harrison, Walter T. 2006 Financial accounting : ann introduction. Peirson, Graham. 2006 Financial accounting : reporting & analysis. Stice, Earl K. Financial accounting. Britton, Anne. 2006 Financial accounting and reporting. Whittington, O. Ray. 2006 Financial accounting in an economic context. Pratt, Jamie. 2006 Financial accounting, reporting and analysis. Elliott, Barry. 2006 • • • • • • • • • • • • • • • • • • • • • • •

Journal, Newspaper and Magazines:

Revised as of May 2009

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 Accounting Times, PICPA IAS PLUS Newsletter, Deloitte and Touche Global Eye on IFRS, Ernst and Young Business World Harvard Business Review

Online/URL: http://www.picpa.com.ph http://www.iasplus.com http://www.iasb.org http://www.ifac.org • • • •

Revised as of May 2009

Computation of Grades: Computation of Periodic Grades Class Standing  Average Quizzes (AQ)………………………………………………….…….30% Class Participation (CP) ………………………………………………...…...10% Major Examination (PEx/MEx/FEx) ………………………………………….……..60% Total …………………………………………………………………….…………….100% a. Determine 1st Preliminary Grade (1 st PG) 1st PG = AQ(30%) + CP (10%) + PEx (60%) b. Determine 2nd Preliminary Grade (2 nd PG) and Midterm Grade (MG) 2nd PG = AQ(30%) + CP (10%) + PEx (60%) MG = 1st PG (50%) + 2 nd PG (50%) c. Determine Final Period (FP) and Final Grade (FG) FP = AQ(30%) + CP (10%) + PEx (60%) FG = MG (50%) + FP (50%)

Passing Grade is 75% with an equivalent point of 3.0 

Revised as of May 2009

Grade Point System

Grade 95 92 90 88 85 82 80 78 75 Below 75%

100% 94% 91% 89% 87% 84% 81% 79% 77%

Point System 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 5.00

Descriptive Equivalent

Superior  Very Good Good Fair  Barely Satisfactory Failure

Prepared by:

Reviewed by:

Approved by:

NORINA S. SALVADOR

JENNIFER T. BUEN Curriculum Committee

ESTELITA D. BELLO Dean - IABF 

Faculty  GERRY V. FERNANDO Curriculum Committee

Revised as of May 2009