TEXAS A&M UNIVERSITY-CORPUS CHRISTI
COLLEGE OF BUSINESS
COURSE SYLLABUS –Spring 2007
Accounting Theory
Monday 7:00-9:30 CI 102
Dr. Steven Hall
OFFICE: Faculty Center, Room 143
825-2357
E-MAIL: steven.hall@tamucc.edu
HOME PAGE: http://www.cob.tamucc.edu/shall
PHONE:
OFFICE HOURS: Tuesday and Thursday 10:00-11:00, 12:15-2:00, Monday 6:00-7:00 or by appointment.
Scheduled appointments will be considered before drop ins.
REQUIRED MATERIALS:
Financial Accounting Theory and Analysis: Text Readings and Cases, 8th
Edition John Wiley & Sons, Inc
Schroeder, Clark, Cathey
ISBN 978-0-471-65243-4, © 2005
Order FARS on line http://he-cda.wiley.com/WileyCDA/Section/id-106057.html
COURSE DESCRIPTION:
A study of diverse accounting theories and concepts. Includes an intensive study of the underlying framework of
financial accounting. Contemporary accounting issues are emphasized focusing on proper financial statement
presentation and disclosure. Prerequisites: accounting foundation courses or their equivalent.
CLASS RULES:
Turn off or put on silent mode all cell phones during this class. Your talking in class time bothers some of the other
students that paid good money to come here and they wish to learn. This class is not so long I expect that once you
arrive you can stay until the end of class. Notebook computers are not to be used in class.
COURSE OBJECTIVES:
 Explain the nature of financial accounting
 Support the need for financial accounting standards
 Identify objectives used for financial reporting
 Relate user-information needs to the decision-making process
 Explain the purpose of accounting's conceptual framework
 Explain the hierarchy of accounting qualities
 Identify user-specific qualities and pervasive constraints
 Differentiate between primary decision-specific qualities required for reliability and relevance
 Identify issues related to recognition and measurement
 Explain the hierarchy of generally accepted accounting principles (GAAP)
 Identify steps used in Financial Accounting Standards Board's (FASB) "due process"
 Identify informational limitations provided by financial reporting
 Compare and contrast capital maintenance, comprehensive income, and earnings
 Differentiate between revenues and gains and expenses and losses
 Identify sources or causes of change in assets, liabilities, and equity
 Differentiate between capitalization and expensing
 Explain off-balance sheet financing
 Explain the characteristics of comprehensive income of business enterprises
INSTRUCTIONAL METHODOLOGY:
Assigned chapters, readings and cases will be discussed in class. Some exercises and problems will be worked in
class. Quizzes will be given periodically.
HOMEWORK:
Students are to read assigned chapters, readings and complete assigned exercises and cases before each class. No
late work will be accepted.
PERFORMANCE EVALUATION AND GRADING:
Readings
FARS
Chapter Cases
Presented Case
Quizzes
Total
100 points
100 points
100 points
100 points
100 points
500 points
There will be two tests, a series of quizzes and some assigned readings and cases given during the semester.
Tests are not group projects. General discussion among students is encouraged (outside of class), supplying the
answers or coping someone’s work is not.
 READINGS:
For each reading assigned, you will find the article, read it, and turn in a typed one page synopsis of each article.
 FARS:
For each FARS Case you need to follow the directions in the text and turn in your findings weekly
 FINANCIAL ANALYSIS CASE:
You will find these on the textbook’s web site www.wiley.com/college/schroeder these need to be turned in weekly.
 CHAPTER CASES:
In most chapters two cases are selected to present. One individual will present and will turn in a written case write
up. All other students will do a one page write up on the case, if you can solve it then do so, if not please
demonstrate the you have knowledge of the case.
 Quizzes
Each evening we will have a quiz over the items that we are to discuss for the evening.
ATTENDANCE POLICY:
Attendance is expected. No points are allocated for attendance and therefore, attendance will not be taken on a daily
basis. However, in the experience of the instructor, there is a high correlation between lack of attendance and low
grades. Talking among students during lectures will not be tolerated. Late arrivals to class should be kept to a
minimum. Early departures from class should be cleared with the instructor before class begins. Students are not
free to get up and walk in and out of class during lectures. Cellular phones and other disruptive electronic devices
should be turned off during lectures. No food or drinks will be permitted in class.
ETHICAL PERSPECTIVES:
Accountants frequently must use their professional judgment to make difficult decisions. The importance of ethical
decision-making will be stressed in all the course material. Furthermore, class discussion will periodically focus
explicitly on problems or cases that involve ethical dilemmas.
ACADEMIC HONESTY:
University students are expected to conduct themselves in accordance with the highest standards of academic
honesty. Academic misconduct for which a student is subject to penalty includes all forms of cheating, such as illicit
possession of examinations or examination materials, forgery, or plagiarism. (Plagiarism is the presentation of the
work of another as one's own work.)
Jan 22
Introduction and assignment of class projects
Jan 29
Chapter 1 (turn ins from chapter 1 are due this evening)
Readings
 Reinstein, Alan and Thomas R Weirich “Accounting Issues At Enron.” CPA Journal, (December 2002),
Vol. 72 Issue 12, pp. 20-25.
 Schipper, Katherine “Principles-Based Accounting Standards.” Accounting Horizons, (March 2003), Vol.
17 Issue 1, pp. 61-72.
FARS 1-1 Special Purpose Entities (SPEs)
Financial Analysis Case
Feb 5
Chapter 2 (turn ins from chapter 2 are due this evening)
Readings
 American Institute of CPAs. “Comments on the Basic Postulates.” Journal of Accountancy (January 1963),
pp. 44-55.
 Metcalf, Richard W. “The Basic Postulates in Perspective.” Accounting Review (January 1964), pp. 16-21.
Cases
 Case 2-18 Standards Setting
 Case 2-21 High Quality Accounting Standards
FARS 2-2 Use of Present Value (SFAC No. 7)
Financial Analysis Case
Feb 12
Chapter 3
Readings
 Dye, Ronald and Shyam Sunder, “Why Not Allow FASB and IASB Standards to Complete in the U.S.?”
Accounting Horizons, (September 2001), Vol. 15 Issue 3, pp. 257-271.
 Zeff, Stephen A. “'Political' Lobbying on Proposed Standards: A Challenge to the IASB.” Accounting
Horizons, (March 2002), Vol. 16 Issue 1, pp. 43-51.
Cases
 Case 3-10 Possible FASB Reaction to Core Set of IASC Standards
 Case 3-11 IASC Standards to Become World Standards?
FARS Research
Financial Analysis Case
Feb 19
Chapter 4
Readings
 Nelson, Mark W., John A. Elliott and Robin L Tarpley. “How Are Earnings Managed? Examples from
Auditors.” Accounting Horizons, (2003 Supplement), Vol. 17, pp. 17-35
 Fairfield, Patricia M.and John A. Elliott and Robin L Tarpley. “Using Fundamental Analysis to Assess
Earnings Quality: Evidence from the Center for Financial Research and Analysis.” Journal of Accounting,
Auditing & Finance, Fall 001, Vol. 16 Issue 4, pp. 273-297
Cases
 Case 4-12 Tinker vs. Solomons
 Case 4-13 A World Characterized by Partially Efficient Markets
FARS Research – Agency Theory
Financial Analysis Case
Feb 26
Chapter 5
Readings
 Geriesh, Lotfi. “Organizational Culture and Fraudulent Financial Reporting. CPA Journal,(March 2003),
Vol. 73 Issue 3, pp. 28-32.
 Schipper, Katherine and Linda Vincent “Earnings Quality.” Accounting Horizons, (2003 Supplement),
Vol. 17, pp. 97-111
Cases
 Case 5-12 Capital Maintenance Concepts
 Case 5-13 Economic and Accounting Concepts of Income
FARS 5-2 Recognition of Franchise Fee Revenue
Financial Analysis Case
March 5
Chapter 6
Readings
 Lambert, Richard A. “Income Smoothing as Rational Equilibrium Behavior.” The Accounting Review
(October 1984), pp. 604–618.
 Newberry, Susan. “Reporting Performance: Comprehensive Income and its Components.” Abacus,
Oct2003, Vol. 39 Issue 3, pp. 49
Cases
 Case 6-3 Income Statement Format
 Case 6.7 Identify Accounting Changes
FARS 6-3 Extraordinary Items
Financial Analysis Case
March 19
Chapter 7
Readings
 American Accounting Association Committee on Accounting Valuation Bases. “Report of the Committee
on Accounting Valuation Bases.” The Accounting Review. Supplement to Vol. 47 (1972), pp. 535–573.
 Ashton, Robert H. “Objectivity of Accounting Measures: A Multirule-Multimeasurer Approach.” The
Accounting Review (July 1977), pp. 567–575.
Cases
 Case 7-1 Alternate Financial Statement Treatments
 Case 7-3 Analysis of a Statement of Cash Flows
FARS 7-2 Statement of Cash Flows
Financial Analysis Case
March 26
Chapter 8
Readings
 Bohan, Michael P., and Steven Rubin. “LIFO: What Should Be Disclosed.” Journal of Accountancy
(February 1985), pp. 72–77.
 Cramer, Joe J. “Incompatibility of Bad Debt ‘Expense’ with Contemporary Accounting Theory.” The
Accounting Review (July 1972), pp. 596–598.
Cases
 Case 8-2 SFAS No. 115
 Case 8-9 Alternative Inventory Valuations
FARS 8-2 Offsetting Assets and Liabilities
Financial Analysis Case
April 2
Chapter 9
Readings
 Baxter, W. T. “Depreciating Assets: The Forward Looking Approach to Value.” Abacus (December 1970),
pp. 120–131.
 Chye Loh, Lye Alfred, and Tin Hoe Tan. “Asset Write-Offs—Managerial Incentives and Macroeconomic
Factors.” Abacus 38 (1) (February 2002), pp. 134–151.
Cases
 Case 9-1 Donated Assets
 Case 9-3 Depreciation Accounting
FARS 9-2 Asset Impairment Obligations
Financial Analysis Case
April 9
Chapter 10
Readings
 Kaplan, Robert S., and David P. Norton. “Measuring the Strategic Readiness of Intangible Assets.”
Harvard Business Review 82 (2) (February 2004), pp. 52–63.
 Implications of Accounting Research for the FASB's Initiatives on Disclosure of Information about
Intangible Assets. By: Maines, Laureen A.; Bartov, Eli; Fairfield, Patricia M.; Hirst, D. Eric; Iannaconi,
Teresa A.; Mallett, Russell; Schrand, Catherine M.; Skinner, Douglas J.; Vincent, Linda. Accounting
Horizons, Jun2003, Vol. 17 Issue 2, pp. 175-185.
Cases
 Case 10-2 Accounting for Investments
 Case 10-6 Research and Development
FARS 10-2 Debt and Equity Investments
Financial Analysis Case
April 16
Chapter 11
Readings
 Hwang, Angela, and John Patouhas. “Practical Issues in Implementing FASB 133.” Journal of
Accountancy (March 2001), pp. 26–34.
 McCarthy, Ed. “Derivatives Revisited.” Journal of Accountancy (May 2000), pp. 35–43.
Cases
 Case 11-3 Alternative Financial Decisions
 Case 11-6 Contingencies
FARS 11-1 Disclosure of Liabilities by Not-for-Profit Entities
Financial Analysis Case
April 23
Chapter 12
Readings
 Mills, Lillian F. and George E. Plesko. “Bridging the Reporting Gap: A Proposal for More Informative
Reconciling of Book and Tax Income.” National Tax Journal, (December 2003), Vol. 56 Issue 4, pp. 865893.
Cases
 Case 12-3 Accounting for Deferred Tax Assets
 Case 12-8 Accounting for Income Taxes: Different Approaches
FARS 12-2 SFAS No. 95
Financial Analysis Case
April 30
Chapter 13
Readings
 Monson, Dennis W. “The Conceptual Framework and Accounting for Leases.” Accounting Horizons,
(September 2001), Vol. 15 Issue 3, pp. 275-287.
 Ryan, Stephen G. Roibert H. Herz, Teresa E. Iannaconi, Laureen A. Maines, Krishna G. Palepu, Katherine
Schipper, Catherine M. Schrand, Douglas J. Skinner, and Linda Vincent. “Evaluation of the Lease
Accounting Proposed in G4+1 Special Report.” Accounting Horizons, (September 2001), Vol. 15 Issue 3,
pp. 289-298.
Cases
 Case 13-1 Capital versus Operating Leases
 Case 13-6 Lease Accounting: Various Issues
FARS 13-1 Initial Direct Cost Incurred by the Lessor
Financial Analysis Case
CASES:
Chapter 2
Case 2-18 Standards Setting
Case 2-21 High Quality Accounting Standards
Chapter 3
Case 3-10 Possible FASB Reaction to Core Set of IASC Standards
Case 3-11 IASC Standards to Become World Standards?
Chapter 4
Case 4-12 Tinker vs. Solomons
Case 4-13 A World Characterized by Partially Efficient Markets
Chapter 5
Case 5-12 Capital Maintenance Concepts
Case 5-13 Economic and Accounting Concepts of Income
Chapter 6
Case 6-3 Income Statement Format
Case 6.7 Identify Accounting Changes
Chapter 7
Case 7-1 Alternate Financial Statement Treatments
Case 7-3 Analysis of a Statement of Cash Flows
Chapter 8
Case 8-2 SFAS No. 115
Case 8-9 Alternative Inventory Valuations
Chapter 9
Case 9-1 Donated Assets
Case 9-3 Depreciation Accounting
Chapter 10
Case 10-2 Accounting for Investments
Case 10-6 Research and Development
Chapter 11
Case 11-3 Alternative Financial Decisions
Case 11-6 Contingencies
Chapter 12
Case 12-3 Accounting for Deferred Tax Assets
Case 12-8 Accounting for Income Taxes: Different Approaches
Chapter 13
Case 13-1 Capital versus Operating Leases
Case 13-6 Lease Accounting: Various Issues
Chapter 1: The Development of Accounting Theory
Chapter 2: The Pursuit of the Conceptual Framework
Chapter 3: International Accounting
Chapter 4: Research Methodology and Theories on the Uses of Accounting Information
Chapter 5: Income Concepts
Chapter 6: Financial Statements I: The Income Statement
Chapter 7: Financial Statements II: The Balance Sheet and the Statement of Cash Flows
Chapter 8: Working Capital
Chapter 9: Long-Term Assets I: Property, Plant, and Equipment
Chapter 10: Long-Term Assets II: Investments and Intangibles
Chapter 11: Long-Term Liabilities
Chapter 12: Accounting for Income Taxes
Chapter 13: Leases
Chapter 14: Pensions and Other Postretirement Benefits
Chapter 15: Equity
Chapter 16: Accounting for Multiple Entities
Chapter 17: Financial Reporting Disclosure Requirements and Ethical Responsibilities
Jan 22
Jan 29
Feb 5
Feb 12
Feb 19
Feb 26
March 5
March 19
March 26
April 2
April 9
April 16
April 23
April 30
ARTICLES:
Chapter 1
 Reinstein, Alan and Thomas R Weirich “Accounting Issues At Enron.” CPA Journal, (December 2002),
Vol. 72 Issue 12, pp. 20-25.
 Schipper, Katherine “Principles-Based Accounting Standards.” Accounting Horizons, (March 2003), Vol.
17 Issue 1, pp. 61-72.
Chapter 2
 American Institute of CPAs. “Comments on the Basic Postulates.” Journal of Accountancy (January 1963),
pp. 44-55.
 Metcalf, Richard W. “The Basic Postulates in Perspective.” Accounting Review (January 1964), pp. 16-21.
Chapter 3
 Dye, Ronald and Shyam Sunder, “Why Not Allow FASB and IASB Standards to Complete in the U.S.?”
Accounting Horizons, (September 2001), Vol. 15 Issue 3, pp. 257-271.
 Zeff, Stephen A. “'Political' Lobbying on Proposed Standards: A Challenge to the IASB.” Accounting
Horizons, (March 2002), Vol. 16 Issue 1, pp. 43-51.
Chapter 4
 Nelson, Mark W., John A. Elliott and Robin L Tarpley. “How Are Earnings Managed? Examples from
Auditors.” Accounting Horizons, (2003 Supplement), Vol. 17, pp. 17-35
 Fairfield, Patricia M.and John A. Elliott and Robin L Tarpley. “Using Fundamental Analysis to Assess
Earnings Quality: Evidence from the Center for Financial Research and Analysis.” Journal of Accounting,
Auditing & Finance, Fall 001, Vol. 16 Issue 4, pp. 273-297
Chapter 5
 Geriesh, Lotfi. “Organizational Culture and Fraudulent Financial Reporting. CPA Journal,(March 2003),
Vol. 73 Issue 3, pp. 28-32.
 Schipper, Katherine and Linda Vincent “Earnings Quality.” Accounting Horizons, (2003 Supplement),
Vol. 17, pp. 97-111
Chapter 6
 Lambert, Richard A. “Income Smoothing as Rational Equilibrium Behavior.” The Accounting Review
(October 1984), pp. 604–618.
 Newberry, Susan. “Reporting Performance: Comprehensive Income and its Components.” Abacus,
Oct2003, Vol. 39 Issue 3, pp. 49
Chapter 7
 American Accounting Association Committee on Accounting Valuation Bases. “Report of the Committee
on Accounting Valuation Bases.” The Accounting Review. Supplement to Vol. 47 (1972), pp. 535–573.
 Ashton, Robert H. “Objectivity of Accounting Measures: A Multirule-Multimeasurer Approach.” The
Accounting Review (July 1977), pp. 567–575.
Chapter 8
 Bohan, Michael P., and Steven Rubin. “LIFO: What Should Be Disclosed.” Journal of Accountancy
(February 1985), pp. 72–77.
 Cramer, Joe J. “Incompatibility of Bad Debt ‘Expense’ with Contemporary Accounting Theory.” The
Accounting Review (July 1972), pp. 596–598.
Chapter 9
 Baxter, W. T. “Depreciating Assets: The Forward Looking Approach to Value.” Abacus (December 1970),
pp. 120–131.
 Chye Loh, Lye Alfred, and Tin Hoe Tan. “Asset Write-Offs—Managerial Incentives and Macroeconomic
Factors.” Abacus 38 (1) (February 2002), pp. 134–151.
Chapter 10
 Kaplan, Robert S., and David P. Norton. “Measuring the Strategic Readiness of Intangible Assets.”
Harvard Business Review 82 (2) (February 2004), pp. 52–63.
 Implications of Accounting Research for the FASB's Initiatives on Disclosure of Information about
Intangible Assets. By: Maines, Laureen A.; Bartov, Eli; Fairfield, Patricia M.; Hirst, D. Eric; Iannaconi,
Teresa A.; Mallett, Russell; Schrand, Catherine M.; Skinner, Douglas J.; Vincent, Linda. Accounting
Horizons, Jun2003, Vol. 17 Issue 2, pp. 175-185.
Chapter 11

Hwang, Angela, and John Patouhas. “Practical Issues in Implementing FASB 133.” Journal of
Accountancy (March 2001), pp. 26–34.
 McCarthy, Ed. “Derivatives Revisited.” Journal of Accountancy (May 2000), pp. 35–43.
Chapter 12
 Mills, Lillian F. and George E. Plesko. “Bridging the Reporting Gap: A Proposal for More Informative
Reconciling of Book and Tax Income.” National Tax Journal, (December 2003), Vol. 56 Issue 4, pp. 865893.
Chapter 13
 Monson, Dennis W. “The Conceptual Framework and Accounting for Leases.” Accounting Horizons,
(September 2001), Vol. 15 Issue 3, pp. 275-287.
 Ryan, Stephen G. Roibert H. Herz, Teresa E. Iannaconi, Laureen A. Maines, Krishna G. Palepu, Katherine
Schipper, Catherine M. Schrand, Douglas J. Skinner, and Linda Vincent. “Evaluation of the Lease
Accounting Proposed in G4+1 Special Report.” Accounting Horizons, (September 2001), Vol. 15 Issue 3,
pp. 289-298.
Chapter 14
 Amlie, Thomas T. “Finding the True Cost of Pension Plans.” CPA Journal, (January 2004), Vol. 74 Issue 1,
pp. 44-46.
Chapter 15
 Briloff, Abraham J. “Accounting for Stock Options.” CPA Journal, (December 2003), Vol. 73 Issue 12, pp.
12-15.
 Rhoades-Catanach, Shelley C “Dot.com or Dot.bomb? The Unpleasant Tax Surprise of Stock Options in a
Volatile Market.” Issues in Accounting Education, (November 2003), Vol. 18 Issue 4, pp. 385-395.
Chapter 16
 Beresford, Dennis R.. “Congress Looks at Accounting for Business Combinations. Accounting Horizons,
Mar2001, Vol. 15 Issue 1, pp. 73-86.
 Bukics, Rose Marie L and Chapman, Benson J. “The BIG SPLASH: Goodbye, Pooling; Hello, Goodwill
Impairment Testing. CPA Journal, Mar2002, Vol. 72 Issue 3, pp. 32-36.
Chapter 17
 Colson, Robert H. “Evolving Regulations and Oversight in the Public Interest.” CPA Journal, Apr2004,
Vol. 74 Issue 4, pp. 18-25.
 Kuizick, Raymond S. “Sarbanes-Oxley: Effects on Financial Transparency.” S.A.M. Advanced
Management Journal (1984), Winter2004, Vol. 69 Issue 1, pp 43-49.
Chapter 14
Readings
 Amlie, Thomas T. “Finding the True Cost of Pension Plans.” CPA Journal, (January 2004), Vol. 74 Issue 1,
pp. 44-46.
Chapter 15
Readings
 Briloff, Abraham J. “Accounting for Stock Options.” CPA Journal, (December 2003), Vol. 73 Issue 12, pp.
12-15.
 Rhoades-Catanach, Shelley C “Dot.com or Dot.bomb? The Unpleasant Tax Surprise of Stock Options in a
Volatile Market.” Issues in Accounting Education, (November 2003), Vol. 18 Issue 4, pp. 385-395.
Chapter 16 Readings
 Beresford, Dennis R.. “Congress Looks at Accounting for Business Combinations. Accounting Horizons,
Mar2001, Vol. 15 Issue 1, pp. 73-86.
 Bukics, Rose Marie L and Chapman, Benson J. “The BIG SPLASH: Goodbye, Pooling; Hello, Goodwill
Impairment Testing. CPA Journal, Mar2002, Vol. 72 Issue 3, pp. 32-36.
Chapter 17
Readings
 Colson, Robert H. “Evolving Regulations and Oversight in the Public Interest.” CPA Journal, Apr2004,
Vol. 74 Issue 4, pp. 18-25.
 Kuizick, Raymond S. “Sarbanes-Oxley: Effects on Financial Transparency.” S.A.M. Advanced
Management Journal (1984), Winter2004, Vol. 69 Issue 1, pp 43-49.