COURSEWARE Course: ACC Advanced Financial Accounting (3 credits Compulsory)

Transcription

1 COURSEWARE Course: ACC Advanced Financial Accounting (3 credits Compulsory) Course Duration: 3 hours per week for 15 weeks (45 hours) LECTURER 1: Kasum, Abubakar Sidiq. B. Sc, M. Sc., Ph.D., ACA. Department of Accounting and Finance, Faculty of Business and Social Sciences, University of Ilorin, Ilorin, Nigeria abusk@unilorin.edu.ng, abubakarsk@yahoo.com Office Location: Room 22, Department of Accounting and Finance, Olushola Adekanola Building, University of Ilorin, Ilorin. Consultation Hours: Monday to Fridays 2-3pm. Lecturer 2: Bashir, Rukayat Abiola (Mrs) B.Sc (Ilorin), M. Sc in view (BUK), ACA Department of Accounting and Finance, Faculty of Business and Social Sciences, University of Ilorin, Ilorin, Nigeria bashir.ra@unilorin.edu.ng Office Location: Room 29, Olushola Adekanola Building, Department of Accounting and Finance, University of Ilorin, Ilorin. Consultation Hours: Mondays and Wednesdays 2-4pm Discussion Group Address: acc302_2009to2010@yahoogroups.com.au Course Content: Advanced Partnership accounts including design of amalgamation and dissolution schemes Group Accounts Continuous Contemporaneous accounting Constant (current) Purchasing Power Accounting Behavioural aspects of accounting Course The course will lay emphasis on business combination with particular reference to partnership and will also treat piecemeal dissolution which is a follow up of wholesome dissolution that have been treated at the lower level. Group accounts which is a very wide topic will take most of the periods allocated to this course so as to be able to touch the technical aspects of the topic. Other contemporary topics like price level change accounting and the behavioral aspect of accounting is also included. Course Justification: Group account and most of the other topics are entirely new topics to the students because they have not been mentioned at all at the lower levels. Students are therefore required to pay attention and must pass this course before they can graduate more so that it is the concluding

2 aspect of financial accounting. This is to equip the students with knowledge of these advanced level corporate problem situations. Financial accounting as a course will not be taken in the subsequent level of the programme. Course Objectives The general objective of this course is to equip the students with the advance level knowledge that will assist them in solving fairly complex business problem that may involve business combination or conversion. At the end of the course, the students are expected to be knowledgeable in: Accounting for solving fairly real partnership dissolution situation, Accounting for conversion of a partnership concern to a limited liability company. The laws and practices of group accounting, The preparation of consolidated accounts, Accounting for price level change, and Contemporaneous and behavioral discuss in accounting. Course Requirements Every student is expected to participate in all the class activities leading to the completion of the course. These include class attendance for lectures, individual and group assignments, the continuous assessment test and the final comprehensive examination. All students will have to sign up for an account on the Internet to be able to communicate and share knowledge with one another and the course lecturers. Some of the assignments will also be distributed and submitted online. Methods of Grading No Types Score (%) 1. Assignments and Lecture Attendance Continuous Assessment Test Comprehensive final examination Total Score 100 Course Delivery Strategies Both the traditional face to face teaching and the online discussions and presentations techniques shall be employed. While the lectures are wholly delivered in the classroom, materials for the lectures could be given in class, distributed on internet or referred in the school library or E- libraries on the internet. Week 1: Group Account I Objective: To understand the laws and the procedures for accounting for business that have significant interest in other company(ies).

3 Description Background to group accounting. Some of the technical areas that will be examined include the relevant laws in group accounting, contents of group accounts, what a holding and subsidiary company is, group accounting periods and date, exclusion of subsidiaries, accounting for investments in subsidiaries in a parent s separate financial statements and other principles of consolidation. (1) Differentiate between a subsidiary and an associated company (2) What are the methods of consolidation (3) What constitute cost of acquisition (4) What is cost of control account used for (5) Under what conditions can a subsidiary be excluded from consolidation Eno, L. Inanga and Ajayi, C. A., Accountancy, Lagos, Chartered Institute of Bankers of Nigeria, Pg ICAN Distance Learning Pack, Financial Accounting(Study Text and Progress Tests), Accountancy Training and Publications Ltd, Pg ICAN Study Pack, Professional Examination II, Financial Accounting Pg Soyode, L. Accounting for Consolidation, Merger and Reconstructrion Schemes, Bankruptcy and Liquidaion, Silicon Publishing Company, Ibadan Pg 6 WEEK 2: Group Account II. Description The 3hrs in the week will be used in solving illustrative examples on consolidation of balance sheet. (1) When the difference between the cost of parent s investment and its share of the net worth of the subsidiary is allocated, where possible, to identifiable asset, the remainder is shown as what (2) Assets are stated at what value to ascertain the purchase consideration (3) Cost of acquisition comprises of what (4) How is dividend received out of pre-acquisition profits treated in the parent company s account (5) Explain pre and post-acquisition reserve in relation to wholly and partly owned subsidiary Eno, L. Inanga and Ajayi, C. A., Accountancy, Lagos, Chartered Institute of Bankers of Nigeria, Pg ICAN Distance Learning Pack, Financial Accounting(Study Text and Progress Tests), Accountancy Training and Publications Ltd, ICAN Study Pack, Professional Examination II, Financial Accounting Pg Soyode, L. Accounting for Consolidation, Merger and Reconstruction Schemes, Bankruptcy and Liquidation, Silicon Publishing Company, Ibadan Pg

4 Week 3: Group Account III Description Having examined consolidated balance sheet in the previous 2weeks, emphasize will be laid on consolidation of profit and loss account. The 3hrs available for this course in the week will be used for this. Some illustrations will be given in order to bring out technical features involved in preparing consolidated profit and loss account (1) Does elimination of inter-company items in the profit and loss account affect minority shareholders (2) Should intercompany items such as dividend payments, interest, management fees etc be included or not (3) Whose proposed dividend should appear in the consolidated profit and loss account (4) Only the group s share of what profit or loss of the subsidiary should be included if a subsidiary is acquired during the accounting period (5) What are some of the rules for removing unrealized profit Eno, L. Inanga and Ajayi, C. A., Accountancy, Lagos, Chartered Institute of Bankers of Nigeria, Pg ICAN Distance Learning Pack, Financial Accounting(Study Text and Progress Tests), Accountancy Training and Publications Ltd, Pg ICAN Study Pack, Professional Examination II, Financial Accounting Pg Soyode, L. Accounting for Consolidation, Merger and Reconstructrion Schemes, Bankruptcy and Liquidation, Silicon Publishing Company, Ibadan Pg Week 4: Group Account IV Description Accounting for Associated Company: An associated company is a company, which is not a subsidiary, and in respect of which the investor s interest in the voting power is 20% and above and the investor has the power to exercise significant influence over the policies of the company. This week will be devoted to the accounting treatment of an associated company. The theories and some illustrations will be treated in class with the students. (1) What is an associated company (2) What are the methods of accounting for investment in an associated company (3) Should assets and liabilities of an associated be consolidated (4) Differentiate between a subsidiary and an associated company (5) Under what circumstance should an investor discontinue the use of the equity method of accounting for investment in associated company

5 Horngren, C. T., Sundem, G. L., Elliott, J. A. and Philbrick, D. R. (2006), Introduction to Financial Accounting, Ninth Ed., New Jersey, Pearson Prentice Hall, pp ICAN Distance Learning Pack, Financial Accounting(Study Text and Progress Tests), Accountancy Training and Publications Ltd, Pg ICAN Study Pack, Professional Examination II, Financial Accounting Pg Week 5: Group Account V Description Merger of holding and subsidiary company: In the course of merging, the normal entries for closing the books of liquidated companies and opening those of a new company would be done but some peculiarities should be noted. Some of these peculiarities will be discussed and examined. The week will be used for this topic and some illustrations will be to explain these to students in class. (1) What are the 2methods for accounting for acquisition during the year to ensure that only post acquisition profits are consolidate (2) At what point will the 2methods referred to above give the same result Horngren, C. T., Sundem, G. L., Elliott, J. A. and Philbrick, D. R. (2006), Introduction to Financial Accounting, Ninth Ed., New Jersey, Pearson Prentice Hall, pp ICAN Distance Learning Pack, Financial Accounting(Study Text and Progress Tests), Accountancy Training and Publications Ltd, Pg WEEK 6: Group Account VI Description Disposal of a Subsidiary: When a subsidiary is disposed off, it should be noted that the ownership of the subsidiary is merely transferred for consideration, the subsidiary is not wound up, and therefore, what the holding company does is disposing off its investment in the subsidiary. The accounting treatment for this will be illustrated. (1) What method is used to write up the investment account to reflect the share of the net assets of the subsidiary at the date of disposal (2) List instances that are regarded as deemed disposal of shares in a subsidiary by a parent company (3) What are the instances of significance influence Eno, L. Inanga and Ajayi, C. A., Accountancy, Lagos, Chartered Institute of Bankers of Nigeria, Pg

6 ICAN Distance Learning Pack, Financial Accounting(Study Text and Progress Tests), Accountancy Training and Publications Ltd, Pg ICAN Study Pack, Professional Examination II, Financial Accounting Pg Horngren, C. T., Sundem, G. L., Elliott, J. A. and Philbrick, D. R. (2006), Introduction to Financial Accounting, Ninth Ed., New Jersey, Pearson Prentice Hall, pp Soyode, L. Accounting for Consolidation, Merger and Reconstruction Schemes, Bankruptcy and Liquidation, Silicon Publishing Company, Ibadan Pg 6 Week 7: Amalgamation of Firms Objective: To study the accounting procedure for combination of merging partnership firms. This is when two or more firms decide to surrender their identities in order to become one. In this case, each amalgamating firms is dissolved and a new one is jointly formed. Partnerships firms dissolving to merge into one will be studied. The arrangement will be illustrated with examples. (1) Under what circumstances can a court decree a dissolution (2) What is the priority of payment/claims when the firms resources are not sufficient to pay off the liabilities of the firm (3) The balance representing profit and loss on realization is shared using what ratio and transferred to what account (4) How are assets taken over by partners treated (5) How are liabilities taken over by partners treated Igben, R. O.,Financial Accounting Made Simple,First Edition,ROI Publishers, Lagos, Pg Wood, F and Saugster, A. (2008), Business Accounting 1, London, Pearson Education Ltd, pp Week 8: Partnership Piecemeal Dissolution Objective: Wholesome dissolution have been treated in the lower level, emphasis is laid on piecemeal dissolution. At the end of this topic, students are expected to be able to use the different methods available for this purpose conveniently. Treatment of partnership dissolution using piecemeal methods. Dissolution and distribution to partners, using the Surplus capital method. (1) Differentiate between wholesome and piecemeal dissolution

7 (2) How are assets taken over by partners treated (3) What ratios are used to distribute losses on partnership dissolution Igben, R. O.,Financial Accounting Made Simple,First Edition,ROI Publishers, Lagos, Pg Wood, F and Saugster, A. (2008), Business Accounting 1, London, Pearson Education Ltd, pp Week 9: Continuation of Partnership Piecemeal Dissolution Dissolution and distribution to partners, using the Assumed loss method (1) What ratio is being used to write off unrealized assets that are regarded as worthless at each stage of the realization (2) What rule is applied when a partner becomes insolvent in the course of adjusting profits or losses (3) When a partnership is to be dissolved, the current account (if any) is merged with which account? Igben, R. O.,Financial Accounting Made Simple,First Edition,ROI Publishers, Lagos, Pg Wood, F and Saugster, A. (2008), Business Accounting 1, London, Pearson Education Ltd, pp Week 10: Continuous Contemporaneous Accounting I Objective: To discuss contemporary topical issues in global accounting and reporting Introduction to the concept of forensic and human intellectual resources accounting. The meaning and nature of forensic accounting engagement. Meaning and various methods of human asset valuation. 1) Forensic accounting could be divided into two broad classes, identify and discuss them. 2) Identify the four areas of specialty in forensic accounting. 3) Write reasonable notes on five methods of human asset valuation. : Kasum, A. S. (2009), The Relevance of Forensic Accounting to Financial Crimes in Private and Public Sectors of Third World Economies: A Study from Nigeria, Proceedings of the 1 st International Conference on Governance Fraud Ethics and Social Responsibility, Trakya University, Edrine, Turkey, Crumbley, D. L (2003) What is Forensic Accounting, Yahaya, K A. (2007), Human Resources Accounting, an unpublished Ph. D. Seminar, Department of Accounting and Finance, University of Ilorin.

8 Week 11: Continuous Contemporaneous Accounting II Objective: To discuss contemporary topical issues in global accounting and reporting Introduction to social responsibility accounting. Developments in corporate social responsibility discuss. Economic meltdown issues. 1) Distinguish between economic recession and depression. 2) What do you understand by corporate social responsibility? 3) What are the methods for incorporation of social cost in accounts? : Elliott, B. and Elliott, J. (2006), Financial Accounting Analysis and Reporting, Second Ed., London, Pearson Education Limited, pp Kasum, A. S. (2009), The Need for General Business Procedures and Practices Standards to Holistically Guide and Regulate Businesses Worldwide and to, Importantly, Prevent Failure: An Empirical Based Proposition, Proceeding of the 27 th Standing Conference on Organisational Symbolism, Copenhagen Business School, Denmark, Kasum, A. S. (2009), Environmental Degradation problems Caused by Human activities in Nigeria: Enforced Vs Voluntary Solution, forth coming in International Journal of Banking, Accounting and Finance, Buzby, S. and Falk, H. (1979), Demand for social responsibility information by Unit trust Investors, The Accounting Review, 54(1) pp 23-37, Week 12: Constant (current) Purchasing Power Accounting I Objective: To study the impacts of general price level changes on financial records The concept of historical financial reporting. Meaning, causes and types of inflation. The implication of inflation on historical accounting and reporting. Methods of dealing with general price level change in financial reporting. 1) What are the implications of inflation for financial reporting? 2) Identify and explain the method for showing the effect of inflation in accounts. : Aborode, R. (2006), A Practical Approach to Advanced Financial Accounting, Lagos, Master Stroke Consulting, pp Week 13: Constant (current) Purchasing Power Accounting II Objective: To understand the methods of restating financial statements affected by price level change.

9 A study of the procedure for financial statement restatement using the current cost accounting (CCA) and the current purchasing-power accounting (CPPA) methods. Practical restatement of profit and loss statement and the balance sheet, using the current cost accounting (CCA) and the current purchasing-power accounting (CPPA) methods. 1) Make a step by step description of the application of the current cost accounting (CCA) method for financial statement conversion. 2) Make a step by step description of the application of the current purchasing-power accounting (CPPA) method for financial statement conversion. : Aborode, R. (2006), A Practical Approach to Advanced Financial Accounting, Lagos, Master Stroke Consulting, pp Week 14: Behavioural Aspects of Accounting Objective: To understand the behavioral expectation of organizational stakeholders in an accountant. To discuss the concepts of competency, accuracy and integrity as required of an accountant. Accounting professional ethical requirements. The concepts of leadership and motivation in organization. 1) Write reasonable notes on the concepts of competency, accuracy and integrity as required of an accountant. 2) Give your explanation of the understanding of the personal and reporting standards of accounting. : The Institute of Chartered Accountants of Nigeria, Members Handbook, Elliott, B. and Elliott, J. (2006), Financial Accounting Analysis and Reporting, Second Ed., London, Pearson Education Limited, pp Week 15: Revision of weeks 1 to 14 lessons. A question and answer section, where the two lecturers will be available to answer questions from the class for the first two hours and the lecturers ask questions that will assist preparation for the final examination in the last hour.

10 (1) Differentiate between a subsidiary and an associated company (2) What is cost of control account used for (3) Under what conditions can a subsidiary be excluded from consolidation (4) Cost of acquisition comprises of what (5) How is dividend received out of pre-acquisition profits treated in the parent company s account (6) Explain pre and post-acquisition reserve in relation to wholly and partly owned subsidiary (7) Whose proposed dividend should appear in the consolidated profit and loss account (8) Only the group s share of what profit or loss of the subsidiary should be included if a subsidiary is acquired during the accounting period. What are some of the rules for removing unrealized profit (9) What is an associated company (10) What are the methods of accounting for investment in an associated company (11) Differentiate between a subsidiary and an associated company (12) Under what circumstance should an investor discontinue the use of the equity method of accounting for investment in associated company (13) What are the methods for accounting for acquisition during the year to ensure that only post acquisition profits are consolidate (14) At what point will the methods referred to above give the same result (15) List instances that are regarded as deemed disposal of shares in a subsidiary by a parent company (16) What are the instances of significance influence in group accounting. (17) Under what circumstances can a court decree a dissolution (18) What is the priority of payment/claims when the firms resources are not sufficient to pay off the liabilities of the firm (19) What ratio is used to write off unrealized assets that ate regarded as worthless at each stage of the realization (20) Identify the four areas of specialty in forensic accounting. (21) Write reasonable notes on five methods of human asset valuation. (22) What rule is applied when a partner becomes insolvent in the course of adjusting profits or losses (23) What are the methods for incorporation of social cost in accounts? (24) What are the implications of inflation for financial reporting? (25) Make a step by step description of the application of the current cost accounting (CCA) and current purchasing-power accounting (CPPA) methods for financial statement conversion. (26) Write reasonable notes on the concepts of competency, accuracy and integrity as required of an accountant. (27) Give your explanation of the understanding of the personal and reporting standards of accounting.

11 : Aborode, R. (2006), A Practical Approach to Advanced Financial Accounting, Lagos, Master Stroke Consulting, pp Buzby, S. and Falk, H. (1979), Demand for social responsibility information by Unit trust Investors, The Accounting Review, 54(1) pp 23-37, Crumbley, D. L (2003) What is Forensic Accounting, Eno, L. Inanga and Ajayi, C. A., Accountancy, Lagos, Chartered Institute of Bankers of Nigeria, Pg Elliott, B. and Elliott, J. (2006), Financial Accounting Analysis and Reporting, Second Ed., London, Pearson Education Limited, pp Horngren, C. T., Sundem, G. L., Elliott, J. A. and Philbrick, D. R. (2006), Introduction to Financial Accounting, Ninth Ed., New Jersey, Pearson Prentice Hall, pp Kasum, A. S. (2009), The Relevance of Forensic Accounting to Financial Crimes in Private and Public Sectors of Third World Economies: A Study from Nigeria, Proceedings of the 1 st International Conference on Governance Fraud Ethics and Social Responsibility, Trakya University, Edrine, Turkey, Kasum, A. S. (2009), The Need for General Business Procedures and Practices Standards to Holistically Guide and Regulate Businesses Worldwide and to, Importantly, Prevent Failure: An Empirical Based Proposition, Proceeding of the 27 th Standing Conference on Organisational Symbolism, Copenhagen Business School, Denmark, * Kasum, A. S. (2010), Environmental Degradation problems Caused by Human activities in Nigeria: Enforced Vs Voluntary Solution, International Journal of Banking, Accounting and Finance, Social Responsibility Research Network. Published by Inderscience Enterprises, Soyode, L. Accounting for Consolidation, Merger and Reconstruction Schemes, Bankruptcy and Liquidation, Silicon Publishing Company, Ibadan pp 6, , Yahaya, K A. (2007), Human Resources Accounting, an unpublished Ph. D. Seminar, Department of Accounting and Finance, University of Ilorin. Igben, R. O.,Financial Accounting Made Simple,First Edition,ROI Publishers, Lagos, Pg ICAN Distance Learning Pack, Financial Accounting (Study Text and Progress Tests), Accountancy Training and Publications Ltd, ICAN Study Pack, Professional Examination II, Financial Accounting Pg The Institute of Chartered Accountants of Nigeria, Members Handbook, Note: * Indicate materials available on the internet. All other materials are available in the school library.