Accounting 5170

Corporate Financial Reporting II

Course Description and Schedule

Fall 2023
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Instructor: Dr. Shiheng Wang 汪诗蘅

Office: Room 6020, LSK building
Phone: 2358 7570
E-mail: acwang@ust.hk

Course time: Every Monday, October 30-December 18

Course venue: 9:30am-12:50pm G001, LSK Building
14:30-17:50 G001, LSK Building
Couse website: https://canvas.ust.hk/
Office hours: By appointment
TA: Ren Fang acsteven@ust.hk
__________________________________________________________________________________

Course Objectives

This course is primarily designed for students who have already taken ACCT5160. In this
course, you are expected to master the accounting principles for a wide range of liability
and equity transactions, including long-term liabilities and provisions, corporate bonds,
deferred taxation, leases, and owner's equity.

Course Learning Outcomes

At the end of this course, you should be able to:

1. Think critically and creatively and make effective decisions supported by analytical
and quantitative techniques.

2. Have in-depth grasp of financial accounting frameworks.

3. Become a sophisticated user of financial accounting information, interpret financial

strategies, assess financial risk and understand financial accounting choices made by
managers.

4. Demonstrate an understanding of the international dimensions of accounting.

5. Understand the role played by accountants in providing and ensuring the integrity of
financial and related information.

6. Demonstrate an understanding of the accounting environment in Hong Kong.

7. Demonstrate an understanding of ethical challenges, creative accounting, and

earnings management issues, and develop ethical and social responsibility.

Each lecture has specific learning outcomes, and will be provided in lecture notes.
 General Approach

This course adopts an approach consistent with ACCT5160. We will mix a user
perspective (i.e., to understand and use accounting information) with a preparer
perspective (i.e., to prepare accounting information in the form of journal entries and
financial statement presentations). Therefore, the lectures will discuss both the economic
intuitions of business transactions and related accounting principles and methods.

Given the time constraint and the nature of the topics we are going to cover, the course is
more intensive, technical and challenging than ACCT5160. Therefore, before each lecture,
you are expected to preview the textbook and reading list following the framework
outlined in the PowerPoint slides, otherwise you will have a hard time to follow the pace
of the class discussion. Each lecture will start with concept introduction, followed by
problem-solving and application. After the class, two sets of exercises will be assigned:
(1) independent online quizzes; (2) selected textbook problems. The full set of solutions
to all practice problems at the end of each chapter will be posted on the course website
when the chapter is done. The pressure and workload for preparing exams will be greatly
reduced if you preview before class, actively participate in class discussions and do all
exercises timely after class. This is particularly critical for your success in this course
when the final exam period clashes with the peak season of job hunting. You are strongly
recommended to read the articles in the reading list, which covers a number of timely
and practical issues and topics and is very helpful to enhance your knowledge and
performance in job interviews.

Consultation and Help

• There is no regular office hour. Please email me or Steven to make appointments at

mutually convenient time.

• Please use the discussion board of the course website to ask questions. Steven and I
will check the discussion board and post replies regularly. I do not answer any lecture-
related questions sent by emails. In addition, you are encouraged to use the chat room
to discuss course related issues with your classmates. However, I will not monitor or
read messages posted in the chat room.

Course Materials

• Required textbook: Kieso, Weygandt, Warfield. Intermediate Accounting, 4nd edition

(2020), John Wiley & Sons.
• Handouts: PowerPoint slides/Word/PDF documents used in class are posted on the
course website. You need to either print the notes/documents or bring your computer
with the files on it to class.

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 Assessments

You will be assessed by your performance in class participation, independent homework,

midterm and final exams.

• Participation and professionalism

Your presence in class does NOT count as participation. You are expected to be actively
joining the class discussion. Participation involves responding to questions, asking
meaningful questions and actively contributing to case discussion. Note that the quality
of your participation is more important than the quantity. I also expect professional
conduct in class at all times. I expect everybody to arrive at the classroom on time. Please
do not chat privately and do not surf internet or mobile phones.

• Online quizzes
After we finish the lecture of each chapter, I will release a short quiz online and you are
expected to take the quiz independently before the required deadline. The format tends
to be short exercises and focuses on individual learning objectives. Each quiz takes 2% of
your final grade. The grade is based on the accuracy of your answers, but once you
accurately answer 80% of all questions in a quiz, you get the full 2%.

• Midterm and final exams

The midterm and final exams are non-cumulative. Both exams include calculation
problems similar to end-of-chapter exercises and scenario-type open questions.

There is no makeup arrangement for online quizzes if you fail to finish them before the
deadline. There is no makeup arrangement for midterm and final exams, except when a
prior approval of absence is given by the instructor.

Description Weight
Participation and professionalism 10%
Online quizzes (2%*7) 14%
Midterm exam 36%
Final exam 40%
Total 100%

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 Teaching Schedule and Course Outline (Subject to Changes)

WEEK 1, October 30
Chapter 15 Equity (IAS 32)

Learning Objectives
(1) Issuance and repurchase of common shares
(2) Preference shares
(3) Cash and stock dividends
(4) Stock splits

Practice Problems
E15-18, 22; P15-3, 8, 12; CA15-4, 7.

Readings
(1) Leading Indicators for Investors (Wall Street Journal; Sep 6, 2013)
(2) Why Dividend Stocks Are Getting More Attention from Investors (Wall Street
Journal, May 6, 2022)
(3) Stock Buyback Tax Helps Offset Cost of Changes to Inflation Reduction Act (Wall
Street Journal, Aug 10, 2022)
(4) The Virtues of Stock Buyback (Wall Street Journal, Aug 9, 2022)
(5) Finance Chiefs Weigh Costs and Benefits of Stock Split (Wall Street Journal, Jun 30,
2022)

WEEK 2, November 6
Chapter 13 Provisions and contingencies (IAS 37)

Learning Objectives
(1) Accounting for different types of provisions
(2) Accounting for contingent assets and liabilities

Practice Problems
E13-18, 19, 21; P13-11, 12, 14; CA13-5, 7.

Readings
(1) Financial Statement Fraud Risk Escalates in Pandemic (Wall Street Journal, May
21, 2020)
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 WEEK 3, November 13
Chapter 14 & 16 Non-current liabilities and Convertible Bonds (IFRS 9)

Learning Objectives
(1) Valuation and accounting for bonds payable
(2) Accounting for the extinguishment of non-current liabilities
(3) Accounting for convertible bonds (Chapter 16)

Practice Problems
E14-7, 15, 20; P14-1, 7, 12; CA14-6.
E16-4, 7.

Readings
(1) Rising Rates, Tech Pullback Pummel Convertible Bonds (Wall Street Journal, Jun
27, 2022)
(2) A Convertible-Bond Boom in China Isn’t All Good News for Shareholders (Wall
Street Journal, May 26, 2019)

WEEK 4, November 20
Chapter 16 Dilutive Securities and Earnings Per Share (IAS 33)

Learning Objectives
(1) Accounting for dilutive securities: convertible preference shares and share
warrants
(2) Compute basic EPS
(3) Compute diluted EPS

Practice Problems
E16-10, 16; P16-4, 6; CA16-7.

Readings
(1) The Real Problem with Stock Buybacks (Wall Street Journal, Jul 6, 2018)
(2) Share Buybacks Help Lift Corporate Earnings (Wall Street Journal, Sept 23, 2018)

November 26, 9:30 pm-12:00 pm

Mid-term Exam

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 WEEK 5, November 27
Chapter 17 Investments (IFRS 9)

Learning Objectives
(1) Accounting for three types of debt investments
(2) Accounting for three types of equity investments

Practice Problems
E17-1, 3, 6, 11, 13, 19; P17-1, 5, 8; CA17-7.

Readings
(1) Squaring Venture Capital Valuations with Reality
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955455
(2) Venture Funds and Their Investors Differ on Portfolio Valuation During
Pandemic (Wall Street Journal, Jul 20, 2020)
(3) Swoon in Tech Stocks Puts Startup Valuations in Harsh New Light (Wall Street
Journal, Jul 21, 2022)

WEEK 6, December 4
Chapter 19 Accounting for Income Taxes (IAS 12)

Learning Objectives
(1) Temporary and permanent differences between financial and taxable income
(2) Deferred tax assets and liabilities
(3) Impact of tax rate changes on income tax expense and deferred taxes

Practice Problems
E19-6, 8, 16; P19-3, 8, 9; CA19-7.

Readings
(1) Companies Save Billions in Taxes by Shifting Assets Around Globe (Wall Street
Journal, Apr 8, 2020)
(2) Losing Money Is a Winning Pandemic Tax Strategy for Some Companies (Wall
Street Journal, Aug 8, 2020)

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 WEEK 7, December 11
Chapter 21 Accounting for Leases (IFRS 16)

Learning Objectives
(1) Lease accounting for lessee
(2) Lease accounting for lessor

Practice Problems
E21-4, 6, 8, 12; P21-2, 5, 7, 11; CA21-4.

Readings
(1) New Lease Accounting Standard May Mislead Investors, Credit Suisse Says (Wall
Street Journal, Jul 10, 2019)
(2) Lease-Accounting Rules May Have Hurt Companies’ Valuations, Study Says (Wall
Street Journal, Jan 27, 2020)

WEEK 8, December 18 (9:30 pm-12:00 pm)

Final Exam