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6/10/13

Intermediate Accounting 15e Kieso solutions manual and test bank


Intermediate Accounting 15e Kieso solutions manual and test bank
http://www.mediafire.com/view/ssfg1s56rr9ha91/Intermediate_Accounting_15e_Kieso_Weygandt_Warfield_sm_ch02.doc


http://www.mediafire.com/view/y37pqpr1q9ml3q1/Intermediate_Accounting_15e_Kieso_Weygandt_WarfieldTest_Bankkieso15e_testbank_ch02.doc


by Donald E. KiesoJerry J. WeygandtTerry D. Warfield
March 2013, ©2013


Kieso, Weygandt and Warfield’s Intermediate Accounting continues to set the standard for intermediate accounting students and professionals in the field.    The Fifteenth edition builds on this legacy through new innovative student focused pedagogy in the book itself and with online support.Intermediate Accounting, 15th Edition (EHEP002551) cover image

 Kieso maintains the qualities for which the text is globally recognized, including its reputation for accuracy, comprehensiveness, accessibility, and quality problem material that best prepares students for success on the CPA exam.  The Fifteenth edition offers the most up to date coverage of IFRS and US GAAP in a presentational format suited to the complex challenges of teaching intermediate in these changing times.
 The WileyPLUS homework and learning platform is better than it has ever been for Kieso, with a multitude of new assessment items, multimedia resources, and enhanced functionality to ensure students will do real accounting and get real results.  There have also never been so many options for accessing content, from several online only options, premium value print and digital formats, and custom versions designed to fit your needs perfectly. 
 the sample of the solutions manual and test bank (in Word)


CHAPTER 2

Conceptual Framework for
Financial Reporting



ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)



Topics


Questions
Brief Exercises

Exercises
  Concepts
for Analysis
1.
Conceptual framework–general.
1, 7


1, 2
2.
Objective of financial reporting.
2

1, 2
3
3.
Qualitative characteristics of accounting.
3, 4, 5, 6, 8
1, 2, 3, 4
2, 3, 4
4, 9
4.
Elements of financial statements.
9, 10, 11
6, 10, 12
5

5.
Basic assumptions.
12, 13, 14
5, 7
6, 7

6.
Basic principles:
a.  Measurement.
b.  Revenue recognition.
c.  Expense recognition.
d.  Full disclosure.

15, 16, 17, 18
19, 20, 21, 22, 23
24
25, 26, 27

8, 9, 11
8
8, 11
8, 11

6, 7
7
6, 7
6, 7, 8

5
5
5, 6, 7, 8, 10
10
7.
Accounting principles–comprehensive.


9, 10

8.
Cost constraint.
28, 29, 30

3, 6, 7
11
9.
Assumptions, principles, and constraints.

10
6, 7





ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE)


 

Learning Objectives

Questions

 

Brief Exercises

 

Exercises

Concepts for Analysis

1.      Describe the usefulness of a conceptual framework.
1

1, 2
CA2-1
2.      Describe the FASB’s efforts to construct a conceptual framework.



CA2-1, CA2-2, CA2-3
3.      Understand the objectives of financial reporting.
2

1, 2
CA2-2, CA2-3
4.      Identify the qualitative characteristics of accounting information.
3, 4, 5, 6, 8
1, 2, 3, 4, 5
2, 3, 4
CA2-4, CA2-5
5.      Define the basic elements of financial statements.
7, 10, 11, 26, 27
6, 12
5

6.      Describe the basic assumptions of accounting.
9, 12, 13, 14, 25
7, 10, 11
6, 7

7.      Explain the application of the basic principles of accounting.
15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 26, 27, 28, 29, 30
8, 9, 11
6, 7, 8, 9, 10
CA2-5, CA2-6, CA2-7, CA2-8, CA2-9, CA2-10, CA2-11
8.      Describe the impact that the cost constraint has on reporting accounting information.
28, 29, 30
11
3, 6, 7
CA2-11




ASSIGNMENT CHARACTERISTICS TABLE

 



Item

 


Description

Level of Difficulty

Time
(minutes)

E2-1

 

Usefulness, objective of financial reporting.

Simple


15–20

E2-2

 

Usefulness, objective of financial reporting, qualitative characteristics.

Simple

15–20

E2-3

 

Qualitative characteristics.

Moderate

25–30

E2-4

 

Qualitative characteristics.

Simple

15–20

E2-5

 

Elements of financial statements.

Simple

15–20

E2-6

 

Assumptions, principles, and constraint.

Simple

15–20

E2-7

 

Assumptions, principles, and constraint.

Moderate

20–25

E2-8

 

Full disclosure principle.

Complex

20–25

E2-9

 

Accounting principles–comprehensive.

Moderate

20–25

E2-10

 

Accounting principles–comprehensive.

Moderate

20–25

 

 


 

 

CA2-1

 

Conceptual framework–general.

Simple

20–25

CA2-2

 

Conceptual framework–general.

Simple

25–35

CA2-3

 

Objective of financial reporting.

Moderate

25–35

CA2-4

 

Qualitative characteristics.

Moderate

30–35

CA2-5

 

Revenue recognition principle.

Complex

25–30

 

 

 

 

 

CA2-6

 

Expense recognition principle.

Complex

20–25

CA2-7

 

Expense recognition principle.

Moderate

20–25

CA2-8

 

Expense recognition principle.

Moderate

20–30

CA2-9

 

Qualitative characteristics.

Moderate

20–30

CA2-10

 

Expense recognition principle.

Moderate

20–25

CA2-11

 

Cost Constraint.

Moderate

30–35

 



SOLUTION TO CODIFICATION EXERCISES


CE2-1

(a)    The master glossary provides three definitions of fair value that are found in GAAP:

        Fair Value—The amount at which an asset (or liability) could be bought (or incurred) or settled in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

        Fair Value—The fair value of an investment is the amount that the plan could reasonably expect to receive for it in a current sale between a willing buyer and a willing seller, that is, other than in a forced or liquidation sale. Fair value shall be measured by the market price if there is an active market for the investment. If there is no active market for the investment but there is a market for similar investments, selling prices in that market may be helpful in estimating fair value. If a market price is not available, a forecast of expected cash flows, discounted at a rate commensurate with the risk involved, may be used to estimate fair value. The fair value of an investment shall be reported net of the brokerage commissions and other costs normally incurred in a sale.

        Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(b)    Revenue—Revenue earned by an entity from its direct distribution, exploitation, or licensing of a film, before deduction for any of the entity’s direct costs of distribution. For markets and territories in which an entity’s fully or jointly-owned films are distributed by third parties, revenue is the net amounts payable to the entity by third party distributors. Revenue is reduced by appropriate allowances, estimated returns, price concessions, or similar adjustments, as applicable.

        The glossary references a revenue definition for the SEC: (Revenue (SEC))—See paragraph
942-235-S599-1, Regulation S-X Rule 9-05(c)(2), for the definition of revenue for purposes of Regulation S-X Rule 9-05.

        This definition relates to segment reporting requirements for public companies.

(c)    Comprehensive Income is defined as the change in equity (net assets) of a business entity during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.


CE2-2

The FASB Codification’s organization is closely aligned with the elements of financial statements, as articulated in the Conceptual Framework. This is apparent in the lay-out of the “Browse” section, which has primary links for Assets, Liabilities, Equity, Revenues, and Expenses.




ANSWERS TO QUESTIONS



1.   A conceptual framework is a coherent system of interrelated objectives and fundamentals that can lead to consistent standards and that prescribes the nature, function, and limits of financial account­ing and financial statements. A conceptual framework is necessary in financial accounting for the following reasons:
(1)    It enables the FASB to issue more useful and consistent standards in the future.
(2)    New issues will be more quickly solvable by reference to an existing framework of basic theory.
(3)    It increases financial statement users’ understanding of and confidence in financial reporting.
(4)    It enhances comparability among companies’ financial statements.

2.   The basic objective is to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders, and other creditors in making decisions about providing resources to the entity.

3.   “Qualitative characteristics of accounting information” are those characteristics which contribute to the quality or value of the information. The overriding qualitative characteristic of accounting infor­mation is usefulness for decision making.

4.   Relevance and faithful representation are the two primary qualities of useful accounting information. For information to be relevant, it should should be capable of making a difference in a decision by helping users to form predictions about the outcomes of past, present, and future events or to confirm or correct expectations. Faithful representation of a measure rests on whether the numbers and descriptions match what really existed or happened.

5.   The concept of materiality refers to the relative significance of an amount, activity, or item to informative disclosure, proper presentation of financial position, and the results of operations. Materiality has qualitative and quantitative aspects; both the nature of the item and its relative size enter into its evaluation.

An accounting misstatement is said to be material if knowledge of the misstatement will affect the decisions of the average informed reader of the financial statements. Financial statements are misleading if they omit a material fact or include so many immaterial matters as to be confusing. In the examination, the auditor concentrates efforts in proportion to degrees of materiality and relative risk and disregards immaterial items.

The relevant criteria for assessing materiality will depend upon the circumstances and the nature of the item and will vary greatly among companies. For example, an error in current assets or current liabilities will be more important for a company with a flow of funds problem than for one with adequate working capital.

The effect upon net income (or earnings per share) is the most commonly used measure of materiality. This reflects the prime importance attached to net income by investors and other users of the statements. The effects upon assets and equities are also important as are misstatements of individual accounts and subtotals included in the financial statements. The auditor will note the effects of misstatements on key ratios such as gross profit, the current ratio, or the debt/equity ratio and will consider such special circumstances as the effects on debt agreement covenants and the legality of dividend payments.

CHAPTER 2

CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING

IFRS questions are available at the end of this chapter.

TRUe-FALSe—Conceptual

Answer      No. Description

        T                 1.      Nature of conceptual framework.
        T                 2.      Conceptual framework definition.
        F                 3.      Levels of conceptual framework.
        T                 4       International conceptual framework.
        F                 5.      Statements of Financial Accounting Concepts.
        T                 6.      Objective of financial reporting.
        F                 7.      Financial statement users.
        T                 8.      Relevance and faithful representation.
        T                 9.      Consistency.
        F               10.      Relevance.
        F               11.      Faithful representation.
        F               12.      Basic elements.
        T               13.      Comprehensive income.
        T               14.      Going concern assumption.
        F               15.      Economic entity assumption.
        F               16.      Expense recognition principle.
        T               17.      Recognizable revenues.
        T               18.      Supplementary information.
        F               19.      Cost benefit trade-off.
        F               20.      Conservatism.

Multiple Choice—Conceptual

Answer      No. Description

        c               21.      GAAP defined.
        d               22.      Purpose of conceptual framework.
        c               23.      Conceptual framework.
        d               24.      Conceptual framework purpose.
        d             S25.      Conceptual framework benefits.
        d               26.      Objectives of financial reporting.
        a               27.      Decision usefulness.
        d               28.      General purpose of financial reporting.
        a               29.      Primary objective of financial reporting.
        a             P30.      Example of comparability.
        a             S31.      Primary quality of relevance.
        b               32.      Characteristic of accounting information.
        c               33.      Characteristic of accounting information.
        c               34.      Meaning of comparability.
        a               35.      Meaning of consistency.
Multiple Choice—Conceptual  (cont.)

Answer      No. Description

        d               36.      Ingredient of relevance.
        c               37.      Ingredient of reliability.
        a               38.      Consistency characteristic.
        b               39.      Primary quality of accounting information.
        d               40.      Quality of relevance.
        a               41.      Quality of reliability.
        d               42.      Consistency quality.
        a               43.      Decision-usefulness criterion.
        c               44.      Primary qualities of accounting information.
        b               45.      Definition of relevance.
        b               46.      Definition of reliability.
        d               47.      Relevance quality.
        c               48.      Materiality characteristic.
        d               49.      Completeness characteristic.
        b               50.      Neutrality characteristic.
        d               51.      Neutrality characteristic.
        c               52.      Definition of verifiability.
        a               53.      Quality of predictive value.
        c               54.      Quality of free from error.
        d               55.      Consistency.
        b               56.      Consistency characteristic.
        b               57.      Comparability and consistency.
        d               58.      Comparability.
        d               59.      Elements of financial statements.
        c               60.      Distinction between revenues and gains.
        c               61.      Definition of a loss.
        d               62.      Definition of comprehensive income.
        b               63.      Components of comprehensive income.
        d             P64.      Comprehensive income.
        b             S65.      Earnings vs. comprehensive income.
        a             S66.      Reporting financial statement elements.
        b               67       Basic element of financial statements.
        a               68.      Basic element of financial statements.
        d               69.      Basic element of financial statements.
        c               70.      Definition of gains.
        d               71.      Historical cost assumption.
        c               72.      Periodicity assumption.
        b               73       Going concern assumption.
        b               74.      Periodicity assumption.
        a             S75.      Monetary unit assumption.
        c              S76.      Periodicity assumption.
        c               77.      Monetary unit assumption.
        d               78.      Economic entity assumption.
        a               79.      Economic entity assumption.
        b               80.      Periodicity assumption.
        a               81.      Going concern assumption.
        d               82.      Going concern assumption.
        d               83.      Implications of going concern assumption.
        a               84.      Historical cost principle.
Multiple Choice—Conceptual  (cont.)

Answer      No. Description

        d               85.      Historical cost principle.
        c               86.      Revenue recognition principle.
        d               87.      Revenue recognition principle.
        d               88.      Revenue recognition principle.
        d               89.      Measurement principle.
        c               90.      Expense recognition principle.
        b               91.      Product costs.
        b               92.      Expense recognition principle.
        b               93.      Expense recognition principle.
        b               94.      Expense recognition.
        c               95.      Full-disclosure principle.
        a               96.      Argument against historical cost.
        d               97.      Recognition of revenue.
        b               98.      Revenue recognition principle.
        c               99.      Definition of performance obligation.
        a             100.      Required components of financial statements.
        d             101.      Recognition of expenses.
        c             102.      Historical cost principle.
        a             103.      Expense recognition principle example.
        d             104.      Recording expenditure as asset.
        c             105.      Historical cost principle violation.
        a             106.      Full disclosure principle violation.
        d             107.      Full disclosure principle.
        c             108.      Historical cost principle violation.
        a             109.      Industry practice constraint.
        c             110.      Costs of providing financial information.
        d             111.      Benefits of providing financial information.
        c             112.      Use of materiality.
        b             113.      Definition of prudence/conservation.
        a             114.      Example of materiality constraint.
        d             115.      Constraints to limit the cost of reporting.
        a             116.      Cost-benefit relationship.
        c             117.      Materiality characteristic.
        d             118.      Materiality.
        d             119.      Pervasive constraints.
        a             120.      Prudence or conservatism.
        b             121.      Conceptual framework second level
        a             122.      Trade-offs between characteristics of accounting information.
        c             123.      Trade-offs between characteristics of accounting information.
        c            P124.      Prudence or conservatism.


Multiple Choice—CPA Adapted

Answer      No. Description

        a             125.      Quality of predictive value.
        b             126.      Relevance and faithful representation.
        b             127.      Classification of gains and losses.
        b             128.      Earnings concept.
        a             129.      Components of comprehensive income.
        b             130.      Components of comprehensive income.
        d             131.      Components of comprehensive income.
        d             132.      Components of comprehensive income.
        a             133.      Definition of recognition.

P Note: these questions also appear in the Problem-Solving Survival Guide.
S Note: these questions also appear in the Study Guide.


BRIEF Exercises

 Item            Description

BE2-134          Qualitative characteristics.
BE2-135          Accounting concepts—identification.
BE2-136          Accounting concepts—identification.


EXERCISES

E2-137            Accounting concepts—matching.
E2-138            Accounting concepts—fill in the blanks.
E2-139            Basic assumptions.
E2-140            Historical cost principle.
E2-141            Matching concept.



CHAPTER LEARNING OBJECTIVES

    1.    Describe the usefulness of a conceptual framework.

    2.    Describe the FASB’s efforts to construct a conceptual framework.

    3.    Understand the objective of financial reporting.

    4.    Identify the qualitative characteristics of accounting information.

    5.    Define the basic elements of financial statements.

    6.    Describe the basic assumptions of accounting.

    7.    Explain the application of the basic principles of accounting.

    8.    Describe the impact that the cost constraint has on reporting accounting information.

    9.    Compare the conceptual frameworks underlying GAAP and IFRS.



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