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3AB3 Summer 2010

Commerce 3AB3 Intermediate Financial Accounting I Summer 2010 Course Outline Accounting and Financial Management Services DeGroote School of Business McMaster University

This course teaches students who are interested in careers in financial management service areas how to prepare financial statements and/or analyze financial information. Additional discussion will be focus on issues related to the forthcoming integration of Canadian GAAP (General Acceptable Accounting Principles) into IFRS (International Financial Reporting Standards).


Name: Leanne Keddie E-mail: Office: DSB/319 Office Hours: TBC and by appointment Tel: (905) 635-3454 Class Time and Location: C01 TU, TH 14:00-17:00 C02 TU, TH 18:00-21:00

KTH/B104 KTH/B104

Credit Value: 3 ELM: Yes Participation: Yes Team skills: Yes Verbal skills: Yes Written skills: Yes IT skills: No Numeracy: Yes Innovation: Yes Global: Yes Political: No Social: Yes

3AB3 Summer 2010

This course explores the issues of accounting measurement and financial reporting introduced in 2AA3 in more depth. Students undertake an in-depth analysis of the asset side of the balance sheet. Key elements of this course are understanding the treatment in accordance with Generally Accepted Accounting Principles (GAAP) of cash, temporary investments, receivables, inventories, long-term investments, and capital assets. Also discussed are the accounting concepts underlying GAAP, with particular emphasis on the revenue recognition principle, as well as an introduction to some of the accounting issues underlying the form and content of the primary financial statements: the income statement, the statement of retained earnings, and the balance sheet.

Upon completion of this course, students will be able to complete the following key tasks: Describe what generally accepted accounting principles (GAAP) are and how to apply them. Explain the application of the basic principles of accounting. Apply the correct revenue recognition method to different situations. Explain accounting issues related to the recognition, valuation, and disposition of accounts receivable. Distinguish between the perpetual and periodic inventory systems. Identify items that should be included as inventory cost. Demonstrate the application of lower of cost and market. Apply the appropriate accounting treatment for short-term and long-term investments. Identify the acquisition costs of land, buildings, and equipment. Apply the various methods of depreciation. Prepare financial statement disclosures for capital assets and their related depreciation. Explain the accounting issues related to asset impairment. Describe the characteristics of intangible assets. Apply the procedure for valuing and amortizing intangible assets.


Intermediate Financial Accounting, 9th Canadian Edition, Volume One. Kieso, Weygandt, Warfield, Young, and Wiecek. Wiley, 2010. CICA Handbook (electronic version available in Innis library).

3AB3 Summer 2010

Exams: We will have one mid-term examination (room and scope of the examination TBA) and one final examination (room and scope of the examination TBA). Assignments: I will distribute and collect two homework assignments during the term. Class Participation: Students are responsible for all materials covered and readings assigned. Be prepared to answer certain questions that had been emphasized in prior classes or from the reading assignments. Your performance, attendance, and participation will then be used to determine your participation mark.

Components and Weights

Midterm Exam Final Exam Assignments Class Participation Total 40% 45% 10% 5% 100%

NOTE: The use of a McMaster standard calculator (Casio FX-991) is allowed during examinations in this course. See McMaster calculator policy at the following URL:

At the end of the course your overall percentage grade will be converted to your letter grade in accordance with the following conversion scheme. LETTER GRADE A+ A AB+ B BPERCENT 90 - 100 85 - 89 80 - 84 77 - 79 73 - 76 70 - 72 LETTER GRADE C+ C CD+ D DF PERCENT 67 - 69 63 - 66 60 - 62 57 - 59 53 - 56 50 - 52 00 - 49

3AB3 Summer 2010

Communication and Feedback

Students that are uncomfortable in directly approaching an instructor regarding a course concern may choose to send a confidential and anonymous email to the respective Area Chair at: Students who wish to correspond with instructors directly via email must send messages that originate from their official McMaster University email account. This protects the confidentiality and sensitivity of information as well as confirms the identity of the student. Instructors should conduct an informal course review with students by Class #4 to allow time for modifications in curriculum delivery. Instructors should provide evaluation feedback for at least 10% of the final grade to students prior to Class #8 in the term.

It is the students responsibility to understand what constitutes academic dishonesty. Please refer to the University Senate Academic Integrity Policy at the following URL: This policy describes the responsibilities, procedures, and guidelines for students and faculty should a case of academic dishonesty arise. Academic dishonesty is defined as to knowingly act or fail to act in a way that results or could result in unearned academic credit or advantage. Please refer to the policy for a list of examples. The policy also provides faculty with procedures to follow in cases of academic dishonesty as well as general guidelines for penalties. For further information related to the policy, please refer to the Office of Academic Integrity at:

McMaster University has signed a license with the Canadian Copyright Licensing Agency (Access Copyright) which allows professors, students, and staff to make copies allowed under fair dealing. Fair dealing with a work does not require the permission of the copyright owner or the payment of royalties as long as the purpose for the material is private study, and that the total amount copied equals NO MORE THAN 10 percent of a work or an entire chapter which is less than 20 percent of a work. In other words, it is illegal to: i) copy an entire book, or ii) repeatedly copy smaller sections of a publication that cumulatively cover over 10 percent of the total works content. Please refer to the following copyright guide for further information:

3AB3 Summer 2010


Where students miss a regularly scheduled midterm for legitimate reasons as adjudicated by the Academic Programs Office (APO), the weight for that test will be distributed across other evaluative components of the course at the discretion of the instructor. Documentation explaining such an absence must be provided to the APO within five (5) working days upon returning to school. The approved McMaster Medical Form must be used to document absence for health related reasons. If an examination is missed without a valid reason, students will receive a grade of Zero (0) for that component. University policy states that a student may submit a maximum of three (3) medical certificates per year after which the student must meet with the Director of the program. Please see the following URL for APO forms: Students unable to write at the posted examination time due to the following reasons: religious; work-related (for part-time students only); representing university at an academic or varsity athletic event; and conflicts between two overlapping scheduled midterm examinations, have the option of applying for special examination arrangements. Such requests must be made to the APO at least ten (10) working days before the scheduled examination along with acceptable documentation. There will be only one common sitting for the special examination. Instructors cannot themselves allow students to unofficially write make-up exams/tests. Adjudication of the request must be handled by the APO.


Students with disabilities are required to inform the Centre for Student Development (CSD) of accommodation needs for examinations on or before the last date for withdrawal from a course without failure (please refer to official university sessional dates). Students must forward a copy of such CSD accommodation to the instructor immediately upon receipt. If a student with a disability chooses NOT to take advantage of a CSD accommodation and chooses to sit for a regular exam, a petition for relief may not be filed after the examination is complete. The CSD website is:


The instructor and university reserve the right to modify elements of the course during the term. The university may change the dates and deadlines for any or all courses in extreme circumstances. If either type of modification becomes necessary, reasonable notice and communication with the students will be given with explanation and the opportunity to comment on changes. It is the responsibility of the student to check their McMaster email and course websites weekly during the term and to note any changes. 5

3AB3 Summer 2010


Commerce 3AB3 Intermediate Financial Accounting I Summer 2010 Course Schedule


Chapter 1 and 2 The Canadian Financial Reporting Environment Conceptual Framework Underlying Financial Reporting Chapter 2 and 3 Conceptual Framework Underlying Financial Reporting The Accounting Information System


RA1-2 IASB RA1-5 Principles versus Rules


E2-1, E2-4, E2-10, P3-1, P3-2, P3-10 RA3-3 Financial Statements Dates


Chapters 4 Reporting Financial Performance

E4-2, E4-8, E4-11, E4-15, E4-17, E4-18. RA4-6 Quality of earnings


Chapter 5 Financial Position and Cash Flows (Case Due)

Appendix 5B Specimen Financial Statements. E5-2, E5-10, E5-12, E5-13.


Chapter 6 Revenue Recognition, Cash and Receivables (Temporary Investment will be covered in Chapter 9)

E6-1, E6-5, E6-16, E6-22, P6-1, P6-8, P6-11.


Midterm Examination

Chapters 1 to 6


Chapters 7 Cash and Receivables

E7-1, E7-6, E7-13, E7-15, E7-16, E7-18, E7-26, P7-12, P7-13.

3AB3 Summer 2010


Chapter 8 Inventory: Recognition, Measurement, Valuation and Estimation


E8-1, E8-3, E8-5, E8-6, E8-9, E8-10, E8-12, E8-13, E8-14.


Chapter 8 and 9 Inventory Continue, Investments

E8-17, E8-18, E8-19, E8-21, E8-22, E8-26, E8-27.


Chapter 9 Investments Continue (Case Due)

E9-1, E9-2, E9-7, E9-8, E9-9, E9-11, E9-15, E9-16, E9-18, P9-3, P9-6, P9-9, P9-10. E10-1, E10-3, E10-5, E10-6, E1013, E10-16, E10-18, E10-21. P10-4, P10-6. E11-4, E11-7, E11-9, E11-10, E1113, E11-17, E11-22, E11-24. E12-1, E12-2, E12-4, E12-11, E12-15, E1216, E12-21, E12-24.


Chapter 10 Acquisition of Property, Plant, and Equipment


Chapter 11 and 12 Depreciation, Impairment, and Disposition Goodwill and Other Intangible Assets

Final Examination Review

3AB3 Summer 2010

Case Study Workshop As Commerce students interested in the accounting discipline, you will be required to complete assignments, tests and exams that are given in the form of case studies. Completing case assignments and writing case exams require a unique approach and skills set. As part of this course, you will be expected to attend a mandatory case study workshop. The objective of the case study workshop is to help you to answer case studies in this course, other courses and professional exams in accounting. There will be two different case study workshops presented this term. The Commerce III workshop is for students who have neither passed 3AB3, nor 3AC3. The Commerce IV workshop is for students who have either passed 3AB3, or 3AC3, or both. You only need to attend one session of one of the workshops. The tentative dates and times are: Commerce III workshop sessions TBD Commerce IV workshop sessions TBD

Each session can accommodate a maximum of 50 students. You have to pre-register for the session of your choice on a website that will be provided to you as soon as it is available. Registration takes place on a first-come-first-serve basis. The workshops will be presented by Mr. Paul Ianni, CA, senior accountant at KPMG, Hamilton. Mr. Ianni has significant experience in marking case studies and has marked case studies for the ICAOs School of Accountancy (SOA) and UFE preparation courses.