Financial Reporting and Analysis
Accounting 451-31, Winter 2020
Professor:
Office:
Phone:
Mark Finn
Global Hub 4451
(847) 467-1635
E-mail:
Rooms:
Hours:
m-finn@kellogg.northwestern.edu
Global Hub Rm. TBA
Wed: 6:30-9:30 pm.
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Course description and objectives:
The course will allow students to acquire the tools and general perspectives necessary to become
knowledgeable users of financial statements. This skillset is considered essential for careers in
finance. However, it is also of paramount importance to many general managers, entrepreneurs,
and board members, whose career trajectories inevitably require them to make decisions
involving financial reporting, financial management, and high-level governance.
The pedagogy will employ a combination of lectures, case discussions and analyses, numerical
exercises, and independent readings. The cases used in the course will provide an opportunity to
integrate the abstract tools learned and apply them in a practical context.
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First-year 2Y and 1Y students may place into the class by passing a placement exam
administered to incoming students. Second-year 2Y may take the class if they have successfully
completed ACCT 430 or an equivalent introductory financial accounting class.
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Course materials:
The recommended (but not required) textbook for the course is “Financial Reporting and
Analysis”, by Revsine, Collins, Johnson, Mittelstaedt and Soffer (6th Edition, McGraw-Hill
Irwin, 2015) (referred to as “RCJMS” throughout the syllabus.) The cases are collected in a
course packet available through Study.net. The syllabus and other materials, including markedup lecture slides, handouts, assignments, and suggested solutions where available, will be posted
on Canvas. The schedule shown on Canvas will serve as the master document, and I expect you
to check it frequently for announcements, updates and revisions. All materials on the course
website are for your personal use only and may not be distributed without my prior permission.
Course requirements:
Eight Canvas-based weekly assignments (30% of the class grade).
Online at-home midterm (25% of the class grade)
In-class final examination; open-notes, open-book (35% of the class grade)
The final 10% of the grade will be based on class participation, including responses to in-class
ACCT 451-31 Syllabus – Winter 2020
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questions in the PollEverywhere survey system.
The early final exam option will be allowed for this class. This program is administered by
Kellogg Students Affairs. Students wishing to take their early final exams the weekend before the
official exam week may do so through that office.
Students may work on the weekly assignments in teams of up to five students. However, every
student will be responsible for submitting his or her own answers to the assignment questions in
Canvas. A large portion of the two exams will be based on the assignments.
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Being a part of a well-functioning assignment team can be critical to your success in the class.
Our weekly assignments will be long and hard, but will provide you with the tools that will be
essential to your mastery of the course material. Initially, I will allow students to take the
initiative in forming their own assignment teams. However, if problems arise – for instance, a
particular student not being able to find a team – I reserve the right to intervene in the team
formation process in whatever manner that I believe advances the educational interests of the
class as a whole.
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Kellogg Honor Code:
http://www.kellogg.northwestern.edu/stu_aff/policies/honorcode.htm
The student experience at Kellogg is unique because, among other reasons, students trust that
their classmates will behave with honesty, integrity, and respect in all academic, professional,
and social matters. Adherence to the Kellogg Honor Code plays a key role in engendering this
trust. The Honor Code requires that a student not seek an unfair advantage over other students,
for example, by not giving or receiving unauthorized aid during completion of academic
requirements, by truthfully representing fact and self at all times, and by respecting the property
and personal rights of all members of the Kellogg community. Students’ willingness to abide by
this Code allows faculty and students to interact with a minimum of rules, regulations, and
bureaucracy, which in turn allows us to focus on creating an engaging and challenging academic
environment. In particular, you may not use any material from previous offerings or concurrent
sections of the class in preparing material to be graded. For example, you may not look at
answers to graded assignments from previous quarters, or ask students from other sections of the
class in the current quarter to share solutions to graded assignments, cases, or exams. If you have
questions about what falls within the bounds of honorable behavior, please ask.
Laptops, Cell Phones, etc.
http://www.kellogg.northwestern.edu/stu_aff/policies/etiquette.htm
Kellogg’s Code of Classroom Etiquette governs appropriate classroom behavior for the course.
In particular, I expect students to be punctual arriving for class, to notify me in advance if you
are going to miss a class, and not to engage in disruptive eating during class. Laptops can be
used during class time only for course-related activities, such as note-taking or working out
numerical problems. The use of laptops is only allowed for students sitting in the last row. Please
switch off cell phones or put on silent mode, and put them away before the start of class.
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Course Outline, Accounting 451, Sections 41
Basic revenue recognition:
WEEK 1
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Cash vs. accrual accounting
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Forecasting implications; forensic red flags- DSO/DSDR
Jan 6 & 9
Revsine Readings: Skim/review Ch.3.
Revsine Problems: E3-19, P3-5, P3-11, P3-12.
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Assignment 1 – Revenue Recognition, due January 17
Basic expense recognition:
WEEK 2
Jan 13 & 16
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Period expenses vs. product costs
•
Cash conversion cycle
•
Allowance method
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Revsine Readings: Skim/review Ch.8 and 9.
Revsine Problems: P8-3, P8-4, E9-7, P9-7, P9-10
Assignment 2 – Expense Recognition, due January 24
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Fixed assets
Intangible assets; US GAAP vs. IFRS
WEEK 3
Jan 22 & 23
Revsine Readings: Skim/review Ch.10; read Ch.10, 555-558 &
578-580.
Revsine Problems: E10-3, E10-14, E10-17, P10-6, P10-13, P10-16
Assignment 3 – Intangibles and IFRS, due January 31
ACCT 451-31 Syllabus – Winter 2020
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M&A Accounting
WEEK 4
Jan 27 & 30
Revsine Readings: Ch.16, 961-1004.
Revsine Problems: E16-4, E16-5, E16-7, E16-8, P16-1 P16-11,
P16-14.
Assignment 4 – Purchase price allocation and post-acquisition
performance, due February 7
Formal review of the cash flow statement:
WEEK 5
Feb 3 & 6
The indirect method
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Three-statement modeling articulation (balance sheet, income
statement, and the statement of cash flows)
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Pro-forma forecasting
Begin taxation.
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In lieu of an assignment, we will cover in-class problems allocated
to the class participation grade.
At-home timed two-hour midterm examination, available February 7-14.
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Taxation (continued from Week 5)
WEEK 6
Feb 10 & 13
Revsine Readings: Ch.13 to p.754
Revsine Problems: E13-2, E13-2
Assignment 5 – Taxation, due February 21
Share-based Compensation; Non-GAAP Metrics; EPS
WEEK 7
Feb 17 & 20
Revsine Readings: Ch.15. 904-923
Revsine Problems: P15-15, C15-1
Assignment 6 – Share-based compensation, due Feb. 28
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Fair Value Accounting; Asset Impairments; Restructuring Charges
WEEK 8
Revsine Readings: Ch.10, 558-561 & 576-581; Ch.16, 954-960.
Feb 24 & 27 Revsine Problems: P10-11, P10-21, P10-22, P16-2, P16-13
Assignment 7 – Fair Value, Impairment, and Restructuring,
due March 6
Liabilities: Asset Retirement Obligations, Contingent Liabilities,
and Leases
Mar 2 & 5
Revsine Readings: Ch.12, 690-706 & 724-729
Revsine Problems: E12-13, E12-14, P12-5, P12-13, P12-15
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WEEK 9
Assignment 8 – AROs, Contingent Liabilities, Leases, due
March 13
Taxation, Pt.2
Mar 9 & 12
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WEEK 10
Revsine Readings: Ch.13 from p.755
Revsine Problems: E13-6, E13-10, E13-11, P13-2, P13-5
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In lieu of an assignment, we will cover in-class problems allocated
to the class participation grade.
In-class timed three-hour final examination administered by Kellogg Student Affairs.
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