COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY

Department of Accountancy

Course Outline

Course Code : ACT 113 Semester : 2nd

Course Title : Intermediate Accounting 2 Academic Year : 2019-2020
Credit Units : 6
Prerequisite (s) : ACT112

Course Description

This course is a continuation of Intermediate Accounting 1. It is designed to cover the discussion, appreciation
and application of the Philippine Financial Reporting Standards (PFRS) on the liabilities, financial and non-
financial, and shareholders’ equity including disclosure requirements. It also deals with contemporary issues
such as leases, employee benefits and income taxes. Financial liabilities shall include accounts and other trade
payable, loans payable, commercial paper, derivative financial liabilities, accrued expense payable, returnable
deposits and current maturities of long-term debt, bonds payable, long-term notes payable while non-financial
liabilities shall include advances/ deposits from customers, agency liabilities (VAT, SSS, Withholding Tax,
Income Tax, Property Tax), and warrants.

Course Learning Outcome

At the end of this course, students are expected to:

A Cognitive
1. Have sound knowledge of the generally accepted accounting principles, applicable to the recognition,
measurement and statement presentation of creditors and stockholders’ equities.
2. Integrate and apply the generally accepted accounting principles to problem situations involving
creditors’ and stockholders’ equities that are likely encountered in practice.
3. Understand the application of accounting principles and reporting practices about financial accounting
problems and issues such as leases, deferred income tax, retirement benefits, and changing prices.

B Psychomotor
1. Apply the principles and concepts of accounting which focus on equities and related revenue and
expense items in the presentation of financial and related information to meet external and internal
obligations.
2. Apply the skills in systematic problem solving.

C Affective
1. Develop the value of honesty, objectivity and perseverance.
2. Realize the contributions of accounting standards or GAAP to the development of a more socially
responsible and morally upright professional accountant.
3. Appreciate the role of financial accounting in meeting the informational needs of stakeholders as a
basis for decision-making.
4. Appraise critically the role of International Accounting Standards in achieving harmonization of
accounting standards throughout the world.

Hours/Week 108 hours/ 18 weeks

Course Contents

The following topics are to be discussed for the entire duration the first semester, with the indicated end-of-the-
chapter problems as homework.

SESSION TOPICS HOMEWORK

Session 1 Course Introduction
August 5

Session 2 Liabilities Chapter summary

August 8  Definition; Classification; Measurement; Presentation
 Refinancing; Breach of Covenant End-of-the chapter
 Deferred Revenue, Gift Certificates, Bonus straight

Multiple Choices
Problems
Session 3 Premium Liability Chapter summary
August 12  Premiums
 Cash Rebate Program End-of-the chapter
 Cash Discount Coupon Program straight
 Customer Loyalty Program
Warranty Liability Multiple Choices
 Recognition of Warranty Provision Problems
 Accrual Approach vs Expense as Incurred
 Sale of Warranty
Session 4 Provision vs Contingent Liability Chapter summary
August 15  Definition, Recognition, Measurement of Provision
 Restructuring Provision End-of-the chapter
 Definition, Treatment of Contingent Liability and Contingent straight
Assets
 Definition and Recognition of decommissioning liability Multiple Choices
Problems
Session 5 Bonds Payable Chapter summary
August 19  Definition, Features, Type
 Issuance at Premium/ Discount End-of-the chapter
 Initial and Subsequent Measurement straight
 Bond Issue Cost
 Bond retirement Multiple Choices
 Treasury bonds and Bond refunding Problems
 Straight line and bond outstanding methods
 Fair value option of measuring bonds
Session 6 Effective Interest Method Chapter summary
August 22  Nominal vs Effective
 Effective Interest Method of Amortization of premium/ discount End-of-the chapter
 Market Price of the bonds straight
 Computation of effective interest method
Multiple Choices
Problems
Session 7 Compound Financial Instrument Chapter summary
August 29  Financial Instrument; Financial Liability and Equity instrument;
Compound financial instrument; Bonds with share warrants; End-of-the chapter
Convertible Bonds straight
 SESSION TOPICS HOMEWORK
 Accounting for Compound Financial Instruments; Issuance; Multiple Choices
Exercise of the rights/ privilege; Payment of convertibles bonds Problems
at maturity and before maturity date
Session 8 Note Payable Chapter summary
September 2  Initial and subsequent measurement of note payable
 Note payable issued for cash End-of-the chapter
 Interest and non-interest bearing notes issued for property straight
 Amortized cost vs fair value option
Multiple Choices
Problems
Session 9 Debt restructure Chapter summary
September 9  Definition
 Asset swap; Dacion en pago End-of-the chapter
 Equity Swap straight
 Modification of Terms; Substantial Modification of terms vs non-
substantial modification of terms Multiple Choices
Problems
Session 10 Shareholders’ Equity Chapter summary
September  Concept of corporation; Components
12  Preincorporation subscription requirement End-of-the chapter
 Organization cost straight
 Elements of shareholders’ equity
 Ordinary vs Preference (Callable, Convertible, Redeemable) Multiple Choices
 Legal vs contributed capital; Trust fund doctrine Problems
 Accounting for share capital; subscription; issuance for cash or
noncash consideration and service
 Share issuance cost vs Cost of public offering; Joint cost
 Shares issued at discount
 Watered shares vs secret reserves
 Delinquent subscription
Session 11 Shareholders’ Equity (Treasury Shares, Rights Issue and Share Split) Chapter summary
September  Definition (Treasury Shares, Rights Issue and Share Split)
16  Acquisition, reissuance and retirement of treasury shares End-of-the chapter
 Donated shares straight
 Assessments on shareholders
 Recapitalization Multiple Choices
 Rights issue Problems
 Preference shares issued with warrants
Session 12 Retained earnings (Dividends) Chapter summary
September  Appropriated vs Unappropriated Retained Earnings)
19  Dividends (Cash, Property, Share, Liquidating) End-of-the chapter
 Dividend as expense straight

Multiple Choices
Problems
Session 13 Retained Earnings (Appropriation and Quasi-Reorganization) Chapter summary
September  Statement of retained earnings; Changes in Equity
19  Components of Comprehensive Income End-of-the chapter
 Other Comprehensive Income straight
 Quasi-reorganziation
Multiple Choices
Problems
Session 14 Share-based Compensation (Share Options) Chapter summary
 Share-based compensation plan
 SESSION TOPICS HOMEWORK
September  Equity vs Cash settled End-of-the chapter
23  Share options and measurement straight
 Fair value vs intrinsic value
 Recognition of compensation expense Multiple Choices
 Acceleration of vesting period Problems
 Subsidiary employees granted rights to the equity instrument of
parent
Session 15 Share-based Compensation (Share appreciation right) Chapter summary
September  Share appreciation right
23  Recognition and Measurement of compensation End-of-the chapter
 Cash and share alternative straight

Multiple Choices
Problems
QS Recess
September Study Time
26/ 27
Quiz Series 1 September 30/ October 1

Liabilities
Premium Liability
Warranty Liability
Provision vs Contingent Liability

Quiz Series 2 October 2

Bonds Payable
Effective Interest
Compound Financial Instruments
Notes Payable
Debt Restructuring

Quiz Series 3 October 3/ October 4

Shareholders’ Equity
Retained Earnings
Share-based Payments (Options and Appreciation)

** Deadline for the submission of Summary Notebook

Midterm October 7 – 11
Recess
Midterm October 14-18
Exam (Departmental Exam Schedule will be posted a week earlier)
Session Lessee Accounting (Basic Principles) Chapter summary
 Definition
 Finance Lease vs Operating Lease End-of-the chapter
 Measurement of Lease Asset and Lease Liability straight
 Components of lease payments
 Implicit vs Incremental borrowing rate Multiple Choices
 Actual purchase of underlying asset Problems
 Disclosures – Lessee
Session Lessee Accounting (Other Accounting Issues) Chapter summary
 SESSION TOPICS HOMEWORK
 Extension Option
 Variable payments End-of-the chapter
 Lease modification (separate lease; extension of term; decrease straight
in scope; change in rental)
Multiple Choices
Problems
Session Operating Lease – Lessor Chapter summary
 Definition operating and finance lease
 Criteria for finance End-of-the chapter
 Accounting for operating lease – lessor straight

Multiple Choices
Problems
Session Direct Financing Lease – Lessor Chapter summary
 Finance lease classification of lessor
 Gross vs net investment in lease End-of-the chapter
 Direct financing lease ( with initial direct cost; with residual value straight
guarantee
Multiple Choices
Problems
Session Sales Type Lease – Lessor Chapter summary
 Gross vs net investment in lease
 Sales and cost of goods sold End-of-the chapter
 Sales type lease (with residual value; with initial direct cost; with straight
BPO)
 Actual sale of underlying assets Multiple Choices
 Disclosure for finance lease – lessor Problems
Session Sale and Leaseback Chapter summary
 Definition
 Sales price at FV; Sales price at above FV; Sale price at below End-of-the chapter
FV straight
 Measurement of lease liability and right of use asset
 Gain or loss on right transferred Multiple Choices
Problems
Session Accounting for Income Tax Chapter summary
 Accounting vs taxable income
 Permanent vs temporary differences End-of-the chapter
 Tax bas straight
 Deferred tax liability (DTL) and Deferred tax asset (DTA)
 Accounting income higher than taxable income Multiple Choices
 Accounting income less than taxable income Problems
 Operating loss carry forward
 Income statement approach vs statement of financial position
approach
 Net deferred tax expense or benefit
 Current tax liability vs current tax expense
 Presentation and measurement of DTL and DTA
 Intraperiod vs Interperiod tax allocation
 Disclosures related to income tax
Session Post-Employment Benefits Chapter summary
 Definition
 Postemployment benefits End-of-the chapter
 Contributory vs Noncontributory straight
 Funded vs Unfunded
 SESSION TOPICS HOMEWORK
 Defined contribution plan vs Defined benefit plan and their Multiple Choices
accounting Problems
 Multiemployer plan
 Postemployment benefits under law
 Insured benefits
 Disclosure
 Components of defined benefit cost
 Actuarial valuation
 Qualifying insurance policy
 Measurement of plan assets
 Projected benefit obligation
 Actuarial gains and losses
 Actuarial assumptions
 Remeasurement of projected benefit obligation
Session Defined Benefit Plan (Accounting Procedures) Chapter summary
 Basic accounting consideration – FVPA and PBO
 Prepaid vs accrued benefit cost End-of-the chapter
 Settlement plan straight
 FVPA more than PBO – surplus
 Asset ceiling Multiple Choices
 Disclosures – defined benefit plan Problems
 Transitional provision PASS 19R
 Accounting and reporting by retirement benefit plan
 Report of defined benefit and defined contribution plan
Session Other Employee Benefits Chapter summary
 Short term employee benefits
 Recognition and measurement End-of-the chapter
 Short – term paid absences straight
 Profit-sharing and bonus plans
 Recognition and measurement of profit sharing and bonus plans Multiple Choices
 Other long-term employee benefits Problems
 Recognition and measurement of Other long-term employee
benefits
 Termination benefits
 Recognition and measurement of Termination benefits
QS Recess
QS1
QS2
QS3
Final Recess
Final Exam

Course Requirements

• Quizzes and Examination

- Topical quizzes will be scheduled
- Two major examinations are administered for the semester ( Midterm and Final)
• Summary notes
• Disclosure checklist
• List of accounting standards
Grading/ Marking System

Periodical grades will be based on the results of the quizzes and major exams having weights as follows:

Assignments, Quizzes, Recitation, Projects 50%

Midterm Examination 25%
Final Examination 25%
Total 100%
The passing grade equivalence shall be 75%.

Course Policies: Regulations And Special Needs

A. Student Attendance

• Students are encouraged to attend the classes regularly on time. Tardiness for 3 meetings is
equivalent to 1 absence.
• Any student, who, for unavoidable cause, absents himself from class, must obtain an exercise slip
from his dean to be presented to the instructor concerned not later than the second class session
following the student’s return.
• Absence due to illness must be reported by the student concerned to the University Infirmary in
MSU Campus within three days after his absence in which case a certification of illness must be
secured from University Infirmary.
• A student who is unable to continue with his class due to illness or a similar justifiable cause can
request for a leave of absence.
• Excuses are for the time missed only. All class work missed must be made up for the satisfaction of
the instructor concerned within a reasonable time from date of absence.

B. Schedule of Classes

• 2:30-5:30 – Monday and Thursday

C. Classroom Policies

a. All students are required to have their own prescribed textbook. Students are also encouraged
to use other references to facilitate learning comprehension process.
b. All assigned readings, problem – solving and unfinished classroom exercises must be done
prior to class.
c. Special examination is only given to students who were absent due to illness or other valid
reason.
d. Sanction will be imposed for late submission of course requirements.
e. All students of this class should dress appropriately with ID’s on. Wearing of shorts, sando /
sleeveless and slippers is a probation.
f. Everybody should set their mobile phones in silent mode. Nobody is permitted to manipulate
their phones while classes are on-going.
g. During quizzes or examinations, students should bring their own calculator. In no case shall
smartphones/ tablets be used as replacement for calculators.
h. All students are expected to be academically honest. Any form of scholastic dishonesty,
immoral and unethical behavior will not be tolerated. Any student found guilty of cheating during
examinations or plagiarism in submitted course requirements will (at a minimum) be subjected
to appropriate disciplinary action.

Prescribed textbook
 Intermediate Accounting Volume I, 2019 edition
Conrado Valix, et.al
Conanan Publishing Inc.

Course Facilitator

MICHAEL G. AUDITOR
Certified Public Accountant
Master in Business Administration
Cellular Phone: 0946-838-9446
E-mail: michaelauditor.1983@gmail.com