Posted by & filed under Accounting Principles, Advanced Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting.

On Wednesday, May 26, 2010, the FASB released an exposure draft for the purposes of improving accounting for financial instruments. The new rules, projected to take effect in 2013, incorporate both amortized cost and fair value information about financial instruments held for collection or payment of cash flows.

Questions:

1. According to the article, how does the proposal plan to provide more timely information for financial statement users about anticipated credit losses?

2. What is the deadline for comments and when does FASB plan to hold roundtable meetings?

3. How many members are on the AICPA’s Accounting Standards Executive Committee, that has weighed in on the proposal and who are those represented on the committee?

Source:

Lamoreaux, Matthew (2010). FASB Proposes Comprehensive Changes to Financial Instruments Accounting, Journal of Accountancy, May 26 (Retrievable online at http://www.journalofaccountancy.com/Web/20102977.htm)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, IFRS, Intermediate Accounting, International Accounting.

The head of the Financial Accounting Standards Board, which sets U.S. accounting rules, said June 1, 2010, that he does not expect FASB to meet a June 30, 2011 deadline for convergence with international accounting rules, as requested by the G20 group of industrial and emerging countries. According to FASB chairman, Robert Herz, changes that delay the completion date by about six months will soon be announced to allow for greater public comment on the boards’ proposals.

Questions:

1. According to the article, what controversial proposal was released during the last week of May?

2. According to the article, how long would the boards have had available to release 10 standards and still meet a June 2011 deadline with final standards, given the due process typically followed?

3. According to the FEI, what is the maximum number of proposals that the FASB has ever released at one time for public comment?

Source:

Chasan, Emily. (2010) Accounting Rulemakers to Delay Convergence, Reuters, U.S., June 1 (Retrievable online at http://www.reuters.com/article/idUSTRE6505KE20100601)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

Unemployed Individuals can increase their attractiveness to prospective employers by knowing about  certain tax breaks that employers can secure by hiring them. One group , National Tax Credit Group, LLC, is promoting this advantage by creating a “Tax Credit Card” which they issue to prospective employees after screening them for hiring credit eligibility. This article presents information on how employees can highlight the applicable hiring credit on their resume, as well as work the issue into an interview to improve their chances of being hired.

Questions:

1.  According to the article, which states have the most attractive state-level tax credits for hiring qualified employees?

2. What is the range of tax credits per employee hired?

3.  From a financial accounting standpoint, which journal entries will be impacted by the tax credits? Explain.

Source:

Christian, Blake. (2010). “Unemployed can use tax laws to secure a job,” Education and Careers: Accounting WEB, May 21 (Retrievable online at http://www.accountingweb.com/topic/education-careers/unemployed-can-use-tax-laws-secure-job)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, Intermediate Accounting, Video Updates.

E-mails and other documents were presented as evidence at a hearing examining the causes of the financial crisis on Capitol Hill on April 23, 2010.  This hearing is part of an 18-month investigation by the Senate Permanent Subcommittee on Investigations, led by Senator Carl Levin. Subcommittee assertions are that the rating agencies were well aware of the risks in the housing market and recklessly used rating models that they knew inflated the grades given to securities.

Questions:

1.  Briefly summarize the level of complexity and problems with Congress to regulate the ratings agencies, as noted by Arturo Cifuentes, former V.P of Moody’s (as shown in the video)?

2. What high profile investment firm was implicated as pressuring the ratings agencies? How do you think Congress can prevent this from happening in the future?

3. In 2007, what percentage of AAA-rated mortgage securities were downgraded to junk status?

Source:

Ellis, Blake. (2010). “How credit watchdogs fueled the financial crisis,” CNN Money.com, April 24 (Retrievable online at http://money.cnn.com/2010/04/23/news/economy/credit_rating_agencies_hearing/index.htm?postversion=2010042411)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

Launched in late April 2010, CPAbidding.com provides a new way for individuals and businesses to find and retain CPA-related services. This new Web site is free to use and helps connect individuals and businesses with CPAs. The goal of the service is to provide a more efficient and less expensive option for finding and hiring a CPA.

Questions:

1. Go to the CPAbidding.com website and look under the frequently asked questions (FAQs). What types of services do they show as being provided by CPAs? Which of these are the most interesting to you?
2. What was the website modeled after? Do you think that this service is good idea? Why or why not?
3. What are the three fee structures used for submitting bids?

Source:

AccountingWEB staff. (2010).“Do I Hear $1,000? CPAbidding.com Provides A New Way to Find a CPA.” Accounting and Auditing: Accounting WEB, May 20. (Retrievable online at http://www.accountingweb.com/topic/accounting-auditing/do-i-hear-1000-cpabiddingcom-provides-new-way-find-cpa)

Posted by & filed under Accounting Principles, All Articles, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting, Video Updates.

If the merger is approved, United Airlines and Continental Airlines will also be merging their frequent flyer programs.  But what is their track record in terms of rewarding the miles versus actual requests?  Consulting group, IdeaWorks Company, said Continental awarded free tickets 71 percent of the time in response to requests, and United 69 percent of the time. While this might not sound that good, IdeaWorks says that these percentages place the two airlines third and fourth, respectively, among domestic carriers most likely to award free seats to frequent-flyer program members.

Questions:

1. According the article about the IdeaWorks survey, which domestic airline has the best track record and which one has the worst track record in granting free ticket requests? Based on these statistics, do the ideas from the video make sense in how you use your frequent flier miles? Why or why not?
2. Explain how airlines should account for frequent flier miles and their expiration in their financial records.
3. According to the video, you can donate your frequent flier miles.  Research who gets the tax deduction from the IRS for this. Do you agree or disagree with this policy?

Sources:

HowdiniGuru. (2009) Frequent Flyer Mile Programs: How to get the most from your miles (Retrievable online at http://www.youtube.com/watch?v=6W3WyqOQAkc)

Pacific Business News Staff. (2010). United Airlines, Continental Airlines among most generous U.S. carriers for free tickets, May 14 (Retrievable online at http://pacific.bizjournals.com/pacific/stories/2010/05/10/daily44.html)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

Accounting firm Grant Thornton is leaving the Hawaiian market this summer after more than 50 years, and selling its practice to two of the firm’s audit partners from the Honolulu office.  Several  established Big Four firms have preceded Grant Thornton in this exodus, including PricewaterhouseCoopers, who left in 2006 after 55 years.

Questions:

1. What is the PKF network?

2. Since PricewaterhouseCoopers (PWC) has a major audit of the Hawaiian Electric Industries (HEI) coming up this year, but no offices in the state, how are they planning to do the work? What is probably the biggest reason that HEI went with PWC over a local accounting firm?

3. What is the reason that large accounting firms have left or are leaving Hawaii?

Source:

Magin, J.L. (2010). Grant Thornton Hawaii Office Changing Hands, Pacific Business News , May 14 (Retrievable online at http://pacific.bizjournals.com/pacific/stories/2010/05/17/story1.html?b=1274068800^3357501)

Posted by & filed under Accounting Principles, All Articles, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting.

Joel Jameson, the founder of Silicon Economics, Inc. is suing the FASB.  He filed for a patent for his invention called “EarningsPower Accounting,” and claims that the FASB has infringed upon the patent.  Jameson claims that his invention is a patented method developed by the company to improve the accuracy, validity, and usefulness of financial statements. SEI’s attorney claims that “FASB’s unlawful attempt to appropriate SEI’s intellectual property undermines innovation and competition, and harms the US economy.

Questions:

1. Look at the actual filing.  According to the suit, what are the problems with FASB’s standard setting process and how did these cause harm?

2.  Based on the sources below, what will Mr. Jameson’s invention address as a significant factor in the recent economic crisis?

3.  What is your opinion about Mr. Jameson’s chances to prevail in this action? Support your reasoning.

Sources:

Ketz, J.E. (2010). The Accounting Cycle: Silicon Economics v. FASB, Accounting Smart Pros, May 6 (Retrievable online at http://accounting.smartpros.com/x69458.xml)

Northern District of California, U.S. District Court (actual filing). (2010). Silicon Economics, Inc. v. FASB, May 5 (Retrievable online at http://www.siliconeconomics.com/pdfs/Complaint_SEI_v_FASB1.pdf)

PR Newswire – Europe (2010).FASB Defendant in Suit Alleging Antitrust Violations and Patent Misappropriation, iStockAnalyst, May 6 (Retrievable online at http://www.www.istockanalyst.com/article/viewiStockNews/articleid/4094646)

Anonymous. (2010). Financial Accounting Standards Board Sued Over Rights To Commenter’s Thoughts, Anti-trust Today, May 18 (Retrievable online at http://www.antitrusttoday.com/category/antitrust-law-and-monopolies/)

Posted by & filed under Accounting Principles, All Articles, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting.

On May 13, 2010, retailers won a victory over the fees they pay to banks for credit cards. An amendment by Sen. Richard J. Durbin is just one more element of the financial regulation overhaul currently underway the Senate.  The measure allows stores to give customers discounts for paying with cash or using cards with cheaper fees, and it would permit retailers to set price thresholds for accepting credit cards. It also tasks the Federal Reserve with crafting regulations for determining whether swipe fees for debit cards are “reasonable and proportional.”

QUESTIONS:

1. What is the average amount that retailers pay to credit card companies?

2. Explain how a retailer makes a journal entry for a credit card sale that includes these swipe fees.

3. Explain how you believe retailers will make journal entries for sales with cash discounts, under the new regulations.

SOURCE:

Dennis, B. and Y. Mui. (2010). Senate Passes Amendment on Debit and Credit Card Swipe Fees,  The Washington Post, May 14. (Retrievable online at http://www.washingtonpost.com/wp-dyn/content/article/2010/05/13/AR2010051303571.html)

Posted by & filed under Accounting Principles, All Articles, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting, Uncategorized, Video Updates.

On Thursday, May 13, 2010, the U.S. Senate  took steps to overhaul the credit-rating agency business, which is widely maligned for its role in the 2007-2009 financial crisis.  An amendment by Democratic Senator Al Franken passed for a government clearinghouse to be set up to assign debt rating duties to agencies, with federal regulators developing their own standards of credit-worthiness rather than relying solely on credit rating agency assessments. In a subsequent vote, lawmakers approved a separate amendment by Sen. George S. LeMieux (R-Fla.) that would remove the government’s stamp of approval for a select group of ratings agencies as the standard for credit worthiness.

Questions:

1.  Who are the main credit agencies that controversial bill was aimed at?

2.  This bill is being touted as the biggest overhaul of financial regulation since the Great Depression.  What regulation(s) was enacted during the Great Depression that impacts accountants to this day?

3.  Briefly explain bond ratings and why it is important for an accountant to understand this concept.

Source:

CNBC. (2010) Amending FinReg, May 13 video (Retrieved online at http://www.cnbc.com/id/15840232?video=1493262393&play=1)