Fr d Syl Spr 16 Posted Large

7/26/2019 Fr d Syl Spr 16 Posted Large

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NEW YORK UNIVERSITY Stern School of Business

Financial Reporting and isclosure Spring !"#$

Professor John S. Bildersee Email:[email protected]

Phone:212-998-2! "lass #eb site: $%& "lasses

Text' (inan)ial *e+ortin, and nalysis by *esine/ "ollins/ Johnson/ 0ittelstaedt and Soffer/SixthEdition.

Course Content:his )ourse )on)entrates on issues that affe)t the nature and uality of finan)ial

re+ortin,. Sele)ted to+i)s introdu)ed +reiously are deelo+ed in more de+th from a mana,ement

+ers+e)tie. dditional to+i)s are also deelo+ed. ))ountin, )hoi)es and finan)ial instruments

are major themes a)ross many of the to+i)s. he +rimary fo)i are on the im+a)ts of mana,ement3s

a))ountin, +oli)y )hoi)es/ estimation on )or+orate re+ortin, and +roblem solin,.

fe# )ourse-related uestions:

4hat ha++ened to a))ountin, and )ontrol at World%o&54hat are the reenue a))ountin, issues asso)iated #ith the '()*utono&+ deba)le56o# do joint +rodu)ts 7e.,. sale #ith seri)e su++ort )ontribute to reenues and e+enses54hen )an inentory be re+orted at its sales alue rather than its a))umulated )ost54hat do +robabilities hae to do #ith a )om+any3s finan)ial statements56o# does fa)torin, im+roe a )om+any3s cash flo,and balan)e sheet56o# does a )om+any3s intent affe)t its re+ortin, of inestments5"an an asset hae a ne,atie sala,e alue54hat is the im+a)t of lease re+ortin, on o+eratin, cash flo,s5s estimation of off-balan)e sheet liabilities meanin,ful54hy do +rofitable )om+anies hae ta aluation allo#an)es 7for losses and ho# do they

deal #ith un)ertain ta +ositions56o# do )om+anies li;e -oogleredu)e their ta obli,ations5"an +ension estimates be mani+ulated and #hat is the im+a)t on the finan)ial statements56o# has IB.)han,ed its +ension +oli)ies54hat are the finan)ial and ta im+a)ts for the )om+any and its inestors of +ayin,

mana,ement in o+tions rather than )ash5

Attendance:ttendan)e and )om+letion of home#or; are essential. %ou should attend e/er+

classto ,et a ,ood understandin, of the )ourse materials.

Exams:here are t#o midterms and a final. Eams are o+en boo; and o+en notes. here are no&a0e)up e1a&s. f you )annot ta;e an eam #hen s)heduled you are e+e)ted to ta;e it earl+.he eams #ill be ,ien on the stated dates. he to+i)s may )han,e if the )ourse falls behinds)hedule.

Quizzes:here #ill be seeral 1< minute ui==es. >ui==es are o+en boo; and o+en notes.>ui==es cannotbe res)heduled. here are no &a0e)up 2ui33es. >ui==es are s)heduled for thefirst )lass follo#in, a ,ien )ha+ter and #ill fo)us on that )ha+ter. he dates of the ui==es may

)han,e if our e+erien)e deiates from this s)hedule. >ui==es are 1


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Extra credit - classroom performance:*eadin,s and )lassroom eer)ises should be reie#ed

before )lass.You are e1pected to 4e a4le to contri4ute to discussions a4out the e1ercises as

,ell as other classroo& discussions5. Positie )ontributions in)lude uestions and #ell-

intended res+onses irres+e)tie of their a))ura)y.

Support materials:Aisit $%& "lasses early and often. t has announ)ements/ )lass notes/ slide

sho#s/ s+readsheets/ sam+le eams and mis)ellaneous arti)les. 0any of the releant materials

#ill be +roided as handouts.

Default policies:Poli)ies not outlined here #ill be )oered by the Stern default +oli)ies do)umentatta)hed to this syllabus.

You are e1pected to follo, the undergraduate code of conduct and the graduate honor codethroughout the se&ester5

Tentative Schedule:

o+i) *eadin,s "lassroom Cis)ussion Su,,ested Eer)ises

Derie#*eenue *e)o,nition

*eenue *e)o,nition 2 7-!2/ F

*eenue *e)o,nition F

GEF.1/EF.2/ EF.!/ EF.12/

EF.1H GPF.ui==es 1< +oints

ttendan)e ! +oints

"lassroom +arti)i+ation Etra )redit

Selected Topics:*eenuee+ensere)o,nition Joint Produ)ts

Per)ent of "om+letion

nstallment Sales

"ommodities

nentory L(D-((D 7multiyear

4ritedo#ns

Collar Aalue L(D

*etail 0ethods

*e)eiables (a)torin,

SPEs 7S+e)ial Pur+ose Entities

Cis)ounts

roubled Cebt *estru)turin,0inorityinestments (air Aalue 6ierar)hy

ailable for sale se)urities

radin, se)urities

Euity method

0ajoritynestments "onsolidations

Leases Lessee

Lessor

Nuarantees

Sale-leaseba);s

aes em+orary deferralsPermanent deferrals

a loss )arryba);s and )arryfor#ards

a aluation allo#an)e

&n)ertain a Positions

Pensions Pension trust fund

Proje)ted obli,ations

Seri)e )osts

ssum+tions

))ruals s. (air I Present Aalue

D#ners3 euity reasury sto);

Sim+le EPS

Ciluted EPS

Se)urity )onersionsEe)utie )om+ensation


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Basic Goals and Issues of Each TopicTopic: Introduction

Goal: Course organization, examples of some of the issues

Basic issues: What are the goals of reporting?

Questions:Why are there reporting options?What inuencing accounting choices?

Classroom discussion case: ears !historical" #nancial statements

$xpected time: % period

Topic: Revenue Recognition

Goal: &nderstanding re'enue reporting issues

Basic issues include: Types of products that are sold, timing re'enues

Questions:(o) do #rms deal )ith compound products such as insurance?(o) do #rms deal )ith long*term pro+ects?(o) do #rms handle mixes of in*store and online sales?

ead: Chapters - !pgs ./ 0 1-" and 2 of text and notes !including representati'e results3ased on interacti'e spreadsheets a'aila3le on 45& Classes and used in class"

Classroom discussion case: Target 6 Google #nancial statements

epresentati'e text3oo7 exercises !some may 3e done in class":$28%, $28-, $281, $28%-,$28%9, 28;

$xpected time: - periods< Topical =uiz follo)s

Topic: Inventories

Goal: &nderstand di>erent in'entory methods

Basic issues include: n'entory choices, estimation in in'entories

Questions:(o) does the @A*AA choice impact #nancial statements?(o) does the @A*AA choice impact the retail method?What is ollar Dalue @A?(o) are in'entory )ritedo)ns handled?

ead: Chapter E and Fppendixes B and C of text and notes !including representati'eresults 3ased on interacti'e spreadsheets a'aila3le on 45& Classes and used inclass"

Classroom discussion case: Target #nancial statements

epresentati'e text3oo7 exercises !some may 3e done in class":$E8%/,$E8%2, E8%9, $E8%.,$E8%1, $E8%E, E8%.

$xpected time: 2 periods, Topical =uiz follo)s

Topic: Receivables (The rst of several nancial topics Review Present Values


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Goal: &nderstand the 'aluation of recei'a3les, &nderstand some )ays to speed thecon'ersion of recei'a3les to

Basic issues include: The ris7s and re)ards of con'ersion options are a'aila3le tocompanies, treatment of trou3led de3ts

Questions:When are recei'a3les discounted?What is factoring and )ho accepts the associated ris7s?Why is trou3led de3t restructuring asymmetric?

ead: Chapter and notes !including representati'e results 3ased on interacti'espreadsheets a'aila3le on 45& Classes and used in class"

epresentati'e text3oo7 exercises !some may 3e done in class":$8., $8%%, $8%2 *$8%;, 8

$xpected time: - periods, Topical =uiz follo)s

Topic: Consolidations 0 Invest!ents

Goal: &nderstand the impact of accounting options for minority in'estments8 Fsecondary goal is to pro'ide some 3asics of ma+ority in'estment accounting!consolidations"8 Ha+ority in'estment accounting !consolidation" is an optionaltopic that may 3e o>ered and )ill not3e tested8

Basic issues include: The di>erence 3et)een accounting choices impacting income and)ealth parts of the #nancial statements8 The di>erence 3et)een accounting for fair!mar7et" 'alues and 3oo7 'alues8 What is a consolidation?

Questions:(o) are in'estments 'alued?What is the distinction 3et)een passi'e and acti'e in'esting?(o) does Itrading securityJ accounting a>ect reported income?(o) does Ia'aila3le for saleJ accounting a>ect the #nancial statements?

What is e=uity method accounting?

ead: Chapter %. !pgs E;2 0 E1/ and Fppendix F" and notes !including representati'eresults 3ased on interacti'e spreadsheets a'aila3le on 45& Classes and used inclass"

Classroom discussion case: #zer #nancial statements< Google #nancial statements, G$#nancial statements for consolidation accounting8

epresentati'e text3oo7 exercises !some may 3e done in class":$%.8% 0 $%.8;,$%.81,$%.8E

$xpected time: 2 periods


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Topic: Consolidations 0 "iabilities

Goal: e'ie) the lia3ility side o> the #nancial statement 3eginning )ith currentlia3ilities and including de3t8 F secondary goal is to pro'ide some 3asics of hedgeaccounting8 (edge accounting is an optional topic that may 3e o>ered and )illnot3e tested8

Basic issues include: The di>erence 3et)een paya3les and accruals8 $stimated lia3ilities8hort and long term de3t8

Questions:What are accrued expenses and estimated expenses?What is the connection 3et)een short term de3t, the current portion of long termde3t and long term de3t in the #nancial statements?

ead: Chapter %% !pgs8 ./% 0 .22, .;- 0 .;." and notes !including representati'e results3ased on interacti'e spreadsheets a'aila3le on 45& Classes and used in class"

Classroom discussion case: G$ #nancial statements for de3t and hedging8

epresentati'e text3oo7 exercises !some may 3e done in class":$%%82, $%%8., $%%8,$%%8E, $%%8%%, %%8%, %%8%%

$xpected time: - periods

Topic: "eases

Goal: &nderstand the impact of an alternate sometimes underreported source of#nancing

Basic issues include: The di>erences and similarities 3et)een lease accounting options8The temporary and permanent impacts on #nancial statements and #nancial ratios

Questions:What is the di>erence 3et)een an operating lease and a capital lease?What is the impact of ne) lease accounting reporting?

(o) do leases compare to de3t?What are leasehold assets?

ead: Chapter %- including the appendix and notes !including representati'e results3ased on interacti'e spreadsheets a'aila3le on 45& Classes and used in class"

Classroom discussion cases: Walmart !leases"

epresentati'e text3oo7 exercises !some may 3e done in class":$%-8% *$%-8,$%-8%-,$%-8%2,$%-8%;



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Topic: Aoreign operations 0 Pensions

Goal: &nderstand the relationship 3et)een pension o3ligations, the separate pensiontrust and the operating company

Basic issues include: The impact of di>erent types of pension or related o3ligations8 Theimpact of estimates and experience and the pension o3ligation8

Questions:What does the structure of a pension plan a>ect the allocation of ris7 to theemployer and employee?What is the impact of company assumptions on the appearance of the plan?(o) are the #nancial statements coordinated )ith the accompanying notes?(o) do external economic e'ents impact the plan and the #nancial statements?

ead: Chapter %9 and notes !including representati'e results 3ased on interacti'espreadsheets a'aila3le on 45& Classes and used in class"

Classroom discussion case: #zer !pension plans"

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Topic: Ta#es

Goal: &nderstand the impact of tax policy on consolidation

Basic issues include: The relationship 3et)een tax reporting and #nancial statementreporting8 $stimation of deferred taxes

Questions:Why do deferred taxes exist?Fre tax rates reported in the #nancial statements reecti'e of cash o)s?What tax rate is rele'ant for estimating deferred taxes?

What o)s are Inet of tax?J

ead: Chapter %2 and notes !including representati'e results 3ased on interacti'espreadsheets a'aila3le on 45& Classes and used in class"

Classroom discussion case: eBay, #zer #nancial statements and tax rates

epresentati'e text3oo7 exercises !some may 3e done in class":$%28%, $%28-, $%28.,$%28%/,$%28%-, $%28%9



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Topic: $wners% E&uit' and anage!ent )o!pensation

Goal: &nderstand the impact of income and #nancial policies on o)nership andmanagement

Basic issues include: (o) do management generated e'ents impact a companyJs netasset position

Questions:Fre di'idends and stoc7 3uy3ac7s e=ui'alent?Why do earnings gro)th and earnings per share gro)th di>er?(o) might paying management in shares or options impact management decisionma7ing?(o) does the choice of using or not using shares impact a decision to ac=uireanother #rm?

ead: Chapter %; !pgs8 E * E2%" and notes !including representati'e results 3ased oninteracti'e spreadsheets a'aila3le on 45& Classes and used in class"

epresentati'e text3oo7 exercises !some may 3e done in class":$%;81, $%;8%- 0 $%;8%;

$xpected time: - periods

Fr d Syl Spr 16 Posted Large

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