ASSIGNMENT CLASSIFICATION TABLE BY TOPIC

Copyright © 2013 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 15/e, Solutions Manual (For Instructor Use Only) 2-1

CHAPTER 2

Conceptual Framework for Financial Reporting

ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC)

Topics

Questions Brief Exercises

Exercises Concepts for Analysis

• Conceptual framework–

general.

1, 7 1, 2

• Objective of financial

reporting.

2 1, 2 3

• Qualitative characteristics

of accounting.

3, 4, 5, 6, 8 1, 2, 3, 4 2, 3, 4 4, 9

• Elements of financial

statements.

9, 10, 11 6, 10, 12 5

• Basic assumptions. 12, 13, 14 5, 7 6, 7

6. Basic principles:

• Measurement.
• Revenue recognition.
• Expense recognition.
• Full disclosure.

15, 16, 17, 18

19, 20, 21, 22, 23

24

25, 26, 27

8, 9, 11

8 8, 11 8, 11

6, 7 7 6, 7

6, 7, 8

5 5

5, 6, 7, 8, 10

10

• Accounting principles–

comprehensive.9, 10

• Cost constraint. 28, 29, 30 3, 6, 7 11
• Assumptions, principles,

and constraints.

10 6, 7

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2-2 Copyright © 2013 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 15/e, Solutions Manual (For Instructor Use Only)

ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE)

Learning Objectives Questions

Brief Exercises

Exercises Concepts for Analysis

• Describe the usefulness of a

conceptual framework.

1 1, 2 CA2-1

• Describe the FASB’s efforts to

construct a conceptual framework.

CA2-1, CA2-

2, CA2-3

• Understand the objectives of

financial reporting.

2 1, 2 CA2-2, CA2-

3

• Identify the qualitative

characteristics of accounting information.

3, 4, 5, 6, 8 1, 2, 3, 4, 5 2, 3, 4 CA2-4, CA2-

5

• Define the basic elements of

financial statements.

7, 10, 11,

26, 27

6, 12 5

• Describe the basic assumptions of

accounting.

9, 12, 13,

14, 25

7, 10, 11 6, 7

• Explain the application of the basic

principles of accounting.

15, 16, 17,

18, 19, 20,

21, 22, 23,

24, 26, 27,

28, 29, 30

8, 9, 11 6, 7, 8, 9,

10

CA2-5, CA2-

6, CA2-7,

CA2-8, CA2-

9, CA2-10,

CA2-11

• Describe the impact that the cost

constraint has on reporting accounting information.

28, 29, 30 11 3, 6, 7 CA2-11

Copyright © 2013 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 15/e, Solutions Manual (For Instructor Use Only) 2-3

ASSIGNMENT CHARACTERISTICS TABLE

Item

Description Level of Difficulty Time (minutes) E2-1 Usefulness, objective of financial reporting. Simple

15–20

E2-2 Usefulness, objective of financial reporting, qualitative characteristics.Simple 15–20 E2-3 Qualitative characteristics. Moderate 25–30 E2-4 Qualitative characteristics. Simple 15–20 E2-5 Elements of financial statements. Simple 15–20 E2-6 Assumptions, principles, and constraint. Simple 15–20 E2-7 Assumptions, principles, and constraint. Moderate 20–25 E2-8 Full disclosure principle. Complex 20–25 E2-9 Accounting principles–comprehensive. Moderate 20–25 E2-10 Accounting principles–comprehensive. Moderate 20–25

CA2-1 Conceptual framework–general. Simple 20–25 CA2-2 Conceptual framework–general. Simple 25–35 CA2-3 Objective of financial reporting. Moderate 25–35 CA2-4 Qualitative characteristics. Moderate 30–35 CA2-5 Revenue recognition principle. Complex 25–30

CA2-6 Expense recognition principle. Complex 20–25 CA2-7 Expense recognition principle. Moderate 20–25 CA2-8 Expense recognition principle. Moderate 20–30 CA2-9 Qualitative characteristics. Moderate 20–30 CA2-10 Expense recognition principle. Moderate 20–25 CA2-11 Cost Constraint. Moderate 30–35

2-4 Copyright © 2013 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 15/e, Solutions Manual (For Instructor Use Only)

SOLUTION TO CODIFICATION EXERCISES

CE2-1

(a) The master glossary provides three definitions of fair value that are found in GAAP:

Fair Value—The amount at which an asset (or liability) could be bought (or incurred) or settled in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

Fair Value—The fair value of an investment is the amount that the plan could reasonably expect to receive for it in a current sale between a willing buyer and a willing seller, that is, other than in a forced or liquidation sale. Fair value shall be measured by the market price if there is an active market for the investment. If there is no active market for the investment but there is a market for similar investments, selling prices in that market may be helpful in estimating fair value. If a market price is not available, a forecast of expected cash flows, discounted at a rate commensurate with the risk involved, may be used to estimate fair value. The fair value of an investment shall be reported net of the brokerage commissions and other costs normally incurred in a sale.

Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

(b) Revenue—Revenue earned by an entity from its direct distribution, exploitation, or licensing of a film, before deduction for any of the entity’s direct costs of distribution. For markets and territories in which an entity’s fully or jointly-owned films are distributed by third parties, revenue is the net amounts payable to the entity by third party distributors. Revenue is reduced by appropriate allowances, estimated returns, price concessions, or similar adjustments, as applicable.

The glossary references a revenue definition for the SEC: (Revenue (SEC))—See paragraph 942-235-S599-1, Regulation S-X Rule 9-05(c)(2), for the definition of revenue for purposes of Regulation S-X Rule 9-05.

This definition relates to segment reporting requirements for public companies.

(c) Comprehensive Income is defined as the change in equity (net assets) of a business entity during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.

CE2-2

The FASB Codification’s organization is closely aligned with the elements of financial statements, as articulated in the Conceptual Framework. This is apparent in the lay-out of the “Browse” section, which has primary links for Assets, Liabilities, Equity, Revenues, and Expenses.