This course offers the reasons why companies invest in other companies. The varying classifications associated with investment securities are presented. Income tax differences due to requirements for calculation of book and taxable income are covered. The concept of deferred taxes and the distinction between permanent and temporary differences are discussed. Appropriate financial statement presentation and disclosure associated with deferred tax assets and liabilities are determined. Changes in accounting estimates and treatment of error corrections are included. The Statement of Cash Flows is revisited to understand the impact of various accounting items covered in this accounting lecture series.
Students will Learn:
- To understand the varying classifications associated with investment securities and how to properly report purchases, sales, and changes in fair value of investment securities.
- The difference between taxes payable and tax expense and how to account for them.
- To record the issuance of stock.
- The two different types of accounting changes, error corrections, and how to prepare a complete statement of cash flows.
Module 1 – Investments in Debt & Equity Securities
Investments in Debt Securities
- Learning Objective: Understand the various reasons for investments; develop knowledge on classifications of debt and equity securities, held-to-maturity securities, and available-for-sale securities, demonstrate ability to calculate each of the securities. .
Investments in Equity Securities
- Learning Objective: Examine and understand the various factors of trading securities, assess the implications of ownership percentages with holding less than 20%, prove ability to compute for equity securities and ownership percentages.
Module 2 – Income Taxes
- Learning Objective: Develop knowledge and demonstrate differentiation skills between taxes payable and tax expense, analyze the various factors of income taxes: temporary differences, future taxable amounts and deferred taxes, and deferred tax liability.
Income Taxes (continued)
- Learning Objective: Discern permanent differences between taxes payable and tax expense, understand the factors of valuation allowance and its computational elements, demonstrate ability to calculate multiple permanent and temporary differences of income taxes.
Module 3 – Income Taxes (continued)
- Learning Objective: Acquire knowledge to account for net operating losses, tax loss carrybacks & carryforwards, calculate operating loss for multi-year and carryforwards, and learn the appropriate format to present financial statements.
Income Taxes (continued)
- Learning Objective: Review asset to liability treatment of tax GAAP differences, valuation allowance, U.S. GAAP vs. IFRS, and intra period tax allocation. Review computational skills of carrybacks, deferred liability, deferred assets, and permanent differences.
Module 4 – Changes and Error Corrections
Accounting Changes and Error Corrections
- Learning Objective: Use accounting skills to make accounting changes to fully optimize error analysis, assess the areas in which changes in accounting estimates occur, demonstrate ability to find changes in accounting estimates and accounting principles.
Accounting Error Corrections
- Learning Objective: Identify and effectively correcting errors when accounting, understand and correct the various errors involved with balance sheet and income statement reporting: counterbalance errors and non-counterbalancing errors. Test computational skills with error correction problems.
Module 5 – Statement of Cash Flows
Statement of Cash Flows
- Learning Objective: Master the preparation, usefulness, and classification when conducting statement of cash flows, demonstrate skills constructing statement of cash flows using both the indirect and method, understand the difference between the indirect and direct method.
Statement of Cash Flows (continued)
- Learning Objective: Using knowledge acquired prepare a statement of cash flows using the balance sheet equation and T-account approach.
- Business undergraduates or MBA students with an accounting or finance focus.