Addis Ababa University

College of Business and Economics (CoBE)

Department of Accounting and Finance
Course Outline
Course code :
Course Title : Advanced Financial Accounting I
Degree Program: BA Degree in Accounting and Finance
ETCTS Credits: 5
Credit/Contact Hours : 3/3
Prerequisite:
Course Description
This course addresses the skills needed to apply some selected financial reporting standards in
business environments. The topics covered in the course include income taxes, share-based
compensation, shareholders equity, joint venture, public enterprises, and branch operations.
Course Objectives
In this, course students examine several complex topics and their effect on financial reporting
and disclosure. The course is designed to cover a selected group of financial accounting topics
under IFRS. Upon successful completion of this course the student will be able to:
 Record, analyze and report financial information related to income taxes, shareholders
equity, and share-based compensations.
 Identify the alternative forms of a joint venture and describe the accounting treatment for
investments in joint arrangements;
 Apply proper accounting techniques to account for branch operations and prepare combined
financial statements for home office and branch.
Course Contents
1. Income Taxes
1.1 The tax base concept
1.2 Recognition of deferred tax liabilities and assets
1.2.1 Future taxable temporary differences
1.2.2 Future deductible temporary differences
1.3 Reconciliation of statutory income tax rate with effective tax rate
 1.4 Accounting for net operating losses
1.5 Income tax presentation and disclosures
2. Shareholders’ Equity
2.1 Components of shareholders’ equity
2.2 Overview of Ethiopian company law
2.3 Accounting for share capital transactions
2.4 Retained earnings and dividends
2.5 Share options and share splits
2.6 Treasury shares
2.7 Earnings per share
3. Share-based Compensations
3.1 Overview of Share-based Payments
3.2 Share-based Payments Settled with Equity
3.3 Share-based Payments Settled with Cash
3.4 Share-based Payments with Cash Alternatives
3.5 Counterparty Has Choice of Settlement
3.6 Issuer Has Choice of Settlement
3.7 Share-based Payment Disclosures
4. Joint Arrangements and Public Enterprises
4.1. Meaning and types of joint arrangements
4.2. Accounting for investments in joint ventures
4.3. Accounting for joint operations
4.4. Accounting for joint ventures
4.5. Disclosure requirements
4.6. Public Enterprises
4.6.1. Overview of Proc. No. 25/1992 and other related Provisions
4.6.2. Accounting for Formation and Operation
4.6.3. Privatization of Public Enterprises
5. Accounting for Branch Operations
5.1. Characteristics and Principles
5.2. Distinction between Agencies and Branches
 5.3. Accounting Systems and the Accounting Entity
5.4. Accounting for Sales Agencies
5.5. Accounting for Branch Operations
5.5.1. Reciprocal (Intracompany) Accounts
5.5.2. Merchandise Shipments to Branches
5.5.3. Allocation of Expenses incurred by Home Office to Branches
5.5.4. Accounting for Branch Fixed Assets
5.5.5. Combined Financial Statements for Home Office and Branch
5.5.6. Reconciliation of Home Office and Branch Accounts
5.5.7. Transactions among Branches
5.5.8. Disposal of a Branch
Assessment Scheme
The course evaluation scheme will be as follows:
Component Weight coverage
Tests 30%
Assignments 20%
Final exam 50%
Total 100%
Roles of the Instructor
He/she will come to the class regularly on time and deliver the lecture in a well-organized
manner. Besides, at the end of each class he/she gives reading assignment for the next
class. He/she will make sure that proper assessments are given. He/she is also responsible to
give feedback for each assessment.
Roles of the Students
The success of this course depends on the students’ individual and collective contribution to the
class discussions. Students are expected to participate voluntarily, or will be called upon,
to contribute to set exercises and problems. Students are also expected to read the
assigned readings and prepare the cases before each class so that they could contribute
effectively to class discussions. Students must attempt assignments by their own.
Proficiency in this course comes from individual knowledge and understanding. Copying the
works of others is considered as serious offence and leads to disciplinary actions.
Text and Reference books
Textbook
Kieso, Weygandt and Warfield, Intermediate Accounting, IFRS Edition (3rd Ed. John Wiley &
Sons, Inc. 2014).

Larsen, J. Modern Advanced Accounting. 11th edition. McGraw-Hill.

Reference Books
Alan Melville (2019). International Financial Reporting, A Practical Guide, Seventh edition
Pearson Education Limited.

Baker, R. E., Lembke, V. C., King, T. E., Jeffrey, C. G., & Christensen, T. (2016). Advanced
Financial Accounting. Eleventh edition. McGraw-Hill/Irwin.

Gordon, Elizabeth A., Raedy, Jana Smith, and Sannella, Alexander John (2019). Intermediate
Accounting. Second Edition. Pearson Education, Inc.

Kieso D.E., Weygandt J.J. and Warfield T.D. (2012). Intermediate Accounting, 14th Ed. John
Wiley & Sons, Inc.

Kieso D.E., Weygandt J.J., Warfield T.D., Wiecek I.M., and McConomy B.J. (2019). Twelfth
Canadian Edition. Vol. 1. John Wiley & Sons Canada, Ltd.

Kieso D.E., Weygandt J.J., Warfield T.D., Wiecek I.M., and McConomy B.J. (2019). Twelfth
Canadian Edition. Vol. 2. John Wiley & Sons Canada, Ltd.

IFRS Blue Book, IFRS Green Book, IFRS Red Book (Latest editions)