No other text is used in more accounting programs, and by more professionals in the field, than Intermediate Accounting by Kieso, Weygandt, and Warfield. The Fourteenth edition redefines the Intermediate Accounting course in light of Convergence and new best practices with the most comprehensive coverage of IFRS on the market! It maintains the qualities for which the text is globally recognized, including its reputation for accuracy, comprehensiveness, accessibility, and quality problem material that best prepares students for success on the CPA exam. This edition sets a new standard to which all others need to be measured when producing well-prepared graduates for the global economy.

Table of Contents:
  Chapter 15 Stockholders’ Equity 842 It’s a Global Market The Corporate Form of Organization 844 State Corporate Law 844 Capital Stock or Share System 844 Variety of Ownership Interests 845 What Do the Numbers Mean? A Class (B) Act 846 Corporate Capital 846 Issuance of Stock 847 What Do the Numbers Mean? The Case of the Disappearing Receivable 851 Reacquisition of Shares 851 What Do the Numbers Mean? Signals to Buy? 852 What Do the Numbers Mean? Not So Good Anymore 855 Preferred Stock 856 Features of Preferred Stock 856 Accounting for and Reporting Preferred Stock 857 Dividend Policy 858 Financial Condition and Dividend Distributions 859 Types of Dividends 859 Stock Split 864 What Do the Numbers Mean? Splitsville 865 What Do the Numbers Mean? Dividends Up, Dividends Down 867 Disclosure of Restrictions on Retained Earnings 867 Presentation and Analysis of Stockholders’ Equity 868 Presentation 868 Analysis 870 APPENDIX 15A Dividend Preferences and Book Value per Share 873 Dividend Preferences 873 Book Value per Share 874 FASB Codification 876 IFRS Insights 895 Chapter 16 Dilutive Securities and Earnings per Share 904 Kicking the Habit SECTION 1 Dilutive Securities and Compensation Plans 906 Debt and Equity 906 Accounting for Convertible Debt 906 At Time of Issuance 907 At Time of Conversion 907 Induced Conversions 907 Retirement of Convertible Debt 908 Convertible Preferred Stock 908  What Do the Numbers Mean? How Low Can You Go? 909 Stock Warrants 909 Stock Warrants Issued with Other Securities 910 Rights to Subscribe to Additional Shares 913 Stock Compensation Plans 913 Accounting for Stock Compensation 915 Stock-Option Plans 915 Restricted Stock 917 Employee Stock-Purchase Plans 918 Disclosure of Compensation Plans 919 Debate over Stock-Option Accounting 919 What Do the Numbers Mean? A Little Honesty Goes a Long Way 921 SECTION 2 Computing Earnings per Share 921 Earnings per Share—Simple Capital Structure 922 Preferred Stock Dividends 922 Weighted-Average Number of Shares Outstanding 923 Comprehensive Example 925 Earnings per Share—Complex Capital Structure 926 Diluted EPS—Convertible Securities 927 Diluted EPS—Options and Warrants 929 Contingent Issue Agreement 930 Antidilution Revisited 931 EPS Presentation and Disclosure 932 What Do the Numbers Mean? Pro Forma EPS Confusion 933 Summary of EPS Computation 934 APPENDIX 16A Accounting for Stock-Appreciation Rights 936 SARS—Share-Based Equity Awards 936 SARS—Share-Based Liability Awards 936 Stock-Appreciation Rights Example 937 APPENDIX 16B Comprehensive Earnings per Share Example 939 Diluted Earnings per Share 940 FASB Codification 944 IFRS Insights 965 Chapter 17 Investments 974 What to Do? Investment Accounting Approaches 976 SECTION 1 Investments in Debt Securities 976 Held-to-Maturity Securities 977 Available-for-Sale Securities 979 Example: Single Security 980 Example: Portfolio of Securities 981 Sale of Available-for-Sale Securities 981 Financial Statement Presentation 982 What Do the Numbers Mean? What Is Fair Value? 983 Trading Securities 983 SECTION 2 Investments in Equity Securities 984 Holdings of Less Than 20% 985 Available-for-Sale Securities 986 Trading Securities 988 Holdings Between 20% and 50% 988 Equity Method 988 What Do the Numbers Mean? Who’s in Control Here? 990 Holdings of More Than 50% 991 SECTION 3 Other Reporting Issues 991 Fair Value Option 991 Available-for-Sale Securities 992 Equity Method of Accounting 992 Impairment of Value 992 Reclassification Adjustments 993 Comprehensive Example 995 Transfers Between Categories 997 Fair Value Controversy 998 Measurement Based on Intent 998 Gains Trading 998 Liabilities Not Fairly Valued 998 Fair Values—Final Comment 998 Summary of Reporting Treatment of Securities 998 What Do the Numbers Mean? More Disclosure, Please 999 APPENDIX 17A Accounting for Derivative Instruments 1001 Defining Derivatives 1001 Who Uses Derivatives, and Why? 1002 Producers and Consumers 1002 Speculators and Arbitrageurs 1002 Basic Principles in Accounting for Derivatives 1003 Example of Derivative Financial Instrument— Speculation 1004 Differences between Traditional and Derivative Financial Instruments 1006 What Do the Numbers Mean? Risky Business 1007 Derivatives Used for Hedging 1008 Fair Value Hedge 1008 Cash Flow Hedge 1010 Other Reporting Issues 1012 Embedded Derivatives 1012 Qualifying Hedge Criteria 1013 Summary of Derivatives Accounting 1014 Comprehensive Hedge Accounting Example 1015 Fair Value Hedge 1015 Financial Statement Presentation of an Interest Rate Swap 1017 Controversy and Concluding Remarks 1018 APPENDIX 17B Variable-Interest Entities 1020 What About GAAP? 1020 Consolidation of Variable-Interest Entities 1021 Some Examples 1022 What Is Happening in Practice? 1022 APPENDIX 17C Fair Value Measurements and Disclosures 1023 Disclosure of Fair Value Information: Financial Instruments—No Fair Value Option 1023 Disclosure of Fair Value Information: Financial Instruments—Fair Value Option 1025 Disclosure of Fair Values: Impaired Assets or Liabilities 1025 FASB Codification 1026 IFRS Insights 1048 Chapter 18 Revenue Recognition 1164 It’s Back Current Environment 1066 Guidelines for Revenue Recognition 1067 Departures from the Sale Basis 1068 What Do the Numbers Mean? Liability or Revenue? 1069 Revenue Recognition at Point of Sale (Delivery) 1069 Sales with Discounts 1070 Sales with Right of Return 1071 Sales with Buybacks 1073 Bill and Hold Sales 1074 Principal-Agent Relationships 1074 What Do the Numbers Mean? Grossed Out 1075 Trade Loading and Channel Stuffing 1077 What Do the Numbers Mean? No Take-Backs 1077 Multiple-Deliverable Arrangements 1078 Summary of Revenue Recognition Methods 1080 Revenue Recognition Before Delivery 1081 Percentage-of-Completion Method 1082 Completed-Contract Method 1087 Long-Term Contract Losses 1088 Disclosures in Financial Statements 1091 What Do the Numbers Mean? Less Conservative 1091 Completion-of-Production Basis 1092 Revenue Recognition after Delivery 1092 Installment-Sales Method 1092 Cost-Recovery Method 1101 Deposit Method 1102 Summary of Product Revenue Recognition Bases 1103 Concluding Remarks 1103 APPENDIX 18A Revenue Recognition for Franchises 1105 Initial Franchise Fees 1106 Example of Entries for Initial Franchise Fee 1106 Continuing Franchise Fees 1107 Bargain Purchases 1107 Options to Purchase 1108 Franchisor’s Cost 1108 Disclosures of Franchisors 1108 FASB Codification 1109 IFRS Insights 1134 Chapter 19 Accounting for Income Taxes 1142 How Much Is Enough? Fundamentals of Accounting for Income Taxes 1144 Future Taxable Amounts and Deferred Taxes 1145 What Do the Numbers Mean? “Real Liabilities” 1148 Future Deductible Amounts and Deferred Taxes 1149 What Do the Numbers Mean? “Real Assets” 1151 Income Statement Presentation 1152 Specific Differences 1153 Tax Rate Considerations 1156 What Do the Numbers Mean? Global Tax Rates 1157 Accounting for Net Operating Losses 1158 Loss Carryback 1158 Loss Carryforward 1158 Loss Carryback Example 1159 Loss Carryforward Example 1159 What Do the Numbers Mean? NOLs: Good News or Bad? 1163 Financial Statement Presentation 1164 Balance Sheet 1164 Income Statement 1165 Uncertain Tax Positions 1168 What Do the Numbers Mean? Sheltered 1169 Review of the Asset-Liability Method 1169 APPENDIX 19A Comprehensive Example of Interperiod Tax Allocation 1173 First Year—2011 1173 Taxable Income and Income Taxes Payable—2011 1174 Computing Deferred Income Taxes— End of 2011 1174 Deferred Tax Expense (Benefit) and the Journal Entry to Record Income Taxes—2011 1175 Financial Statement Presentation—2011 1176 Second Year—2012 1177 Taxable Income and Income Taxes Payable—2012 1178 Computing Deferred Income Taxes—End of 2012 1178 Deferred Tax Expense (Benefit) and the Journal Entry to Record Income Taxes—2012 1179 Financial Statement Presentation—2012 1179 FASB Codification 1180 IFRS Insights 1199 Chapter 20 Accounting for Pensions and Postretirement Benefits 1208 Where Have All the Pensions Gone? Nature of Pension Plans 1210 Defined Contribution Plan 1211 Defined Benefit Plan 1211 What Do the Numbers Mean? Which Plan Is Right for You? 1212 The Role of Actuaries in Pension Accounting 1213 Accounting for Pensions 1213 Alternative Measures of the Liability 1213 Recognition of the Net Funded Status of the Pension Plan 1215 Components of Pension Expense 1215 Using a Pension Worksheet 1218 2012 Entries and Worksheet 1218 Amortization of Prior Service Cost (PSC) 1220 2013 Entries and Worksheet 1221 Gain or Loss 1223 What Do the Numbers Mean? Pension Costs Ups and Downs 1224 2014 Entries and Worksheet 1227 What Do the Numbers Mean? Roller Coaster 1229 Reporting Pension Plans in Financial Statements 1229 Within the Financial Statements 1230 Within the Notes to the Financial Statements 1232 Example of Pension Note Disclosure 1233 2015 Entries and Worksheet—A Comprehensive Example 1235 Special Issues 1236 What Do the Numbers Mean? Bailing Out 1239 Concluding Observations 1239 APPENDIX 20A Accounting for Postretirement Benefits 1241 Accounting Guidance 1241 Differences Between Pension Benefits and Healthcare Benefits 1242 What Do the Numbers Mean? OPEBs— How Big Are They? 1243 Postretirement Benefits Accounting Provisions 1243 Obligations Under Postretirement Benefits 1244 Postretirement Expense 1245 Illustrative Accounting Entries 1245 2012 Entries and Worksheet 1246 Recognition of Gains and Losses 1247 2013 Entries and Worksheet 1247 Amortization of Net Gain or Loss in 2014 1249 Disclosures in Notes to the Financial Statements 1249 Actuarial Assumptions and Conceptual Issues 1249 What Do the Numbers Mean? GASB Who? 1251 FASB Codification 1252 IFRS Insights 1274 Chapter 21 Accounting for Leases 1288 More Companies Ask, “Why Buy?” The Leasing Environment 1290 Who Are the Players? 1290 Advantages of Leasing 1292 What Do the Numbers Mean? Off–Balance-Sheet Financing 1293 Conceptual Nature of a Lease 1293 Accounting by the Lessee 1294 Capitalization Criteria 1294 Asset and Liability Accounted for Differently 1298 Capital Lease Method (Lessee) 1298 Operating Method (Lessee) 1301 What Do the Numbers Mean? Restatements on the Menu 1301 Comparison of Capital Lease with Operating Lease 1302 What Do the Numbers Mean? Are You Liable? 1303 Accounting by the Lessor 1304 Economics of Leasing 1305 Classification of Leases by the Lessor 1305 Direct-Financing Method (Lessor) 1307 Operating Method (Lessor) 1309 Special Accounting Problems 1310 Residual Values 1310 Sales-Type Leases (Lessor) 1316 What Do the Numbers Mean? Xerox Takes On the SEC 1319 Bargain-Purchase Option (Lessee) 1319 Initial Direct Costs (Lessor) 1320 Current versus Noncurrent 1320 Disclosing Lease Data 1321 Lease Accounting—Unresolved Problems 1323 APPENDIX 21A Examples of Lease Arrangements 1327 Example 1: Harmon, Inc. 1328 Example 2: Arden’s Oven Co. 1329 Example 3: Mendota Truck Co. 1329 Example 4: Appleland Computer 1330 APPENDIX 21B Sale-Leasebacks 1331 Determining Asset Use 1331 Lessee 1332 Lessor 1332 Sale-Leaseback Example 1332 FASB Codification 1334 IFRS Insights 1355 Chapter 22 Accounting Changes and Error Analysis 1366 In the Dark SECTION 1 Accounting Changes 1368 Changes in Accounting Principle 1368 What Do the Numbers Mean? Quite a Change 1370 Retrospective Accounting Change Approach 1370 What Do the Numbers Mean? Change Management 1372 Impracticability 1379 Changes in Accounting Estimate 1381 Prospective Reporting 1381 Disclosures 1382 Change in Reporting Entity 1383 Correction of Errors 1383 Example of Error Correction 1385 Summary of Accounting Changes and Correction of Errors 1387 What Do the Numbers Mean? Can I Get My Money Back? 1388 Motivations for Change of Accounting Method 1389 SECTION 2 Error Analysis 1390 Balance Sheet Errors 1390 Income Statement Errors 1391 Balance Sheet and Income Statement Errors 1391 Counterbalancing Errors 1391 Noncounterbalancing Errors 1393 Comprehensive Example: Numerous Errors 1394 What Do the Numbers Mean? Guard the Financial Statements! 1396 Preparation of Financial Statements with Error Corrections 1397 APPENDIX 22A Changing from or to the Equity Method 1401 Change from the Equity Method 1401 Dividends in Excess of Earnings 1401 Change to the Equity Method 1402 FASB Codification 1404 IFRS Insights 1428 Chapter 23 Statement of Cash Flows 1434 Show Me the Money SECTION 1 Preparation of the Statement of Cash Flows 1436 Usefulness of the Statement of Cash Flows 1436 Classification of Cash Flows 1437 What Do the Numbers Mean? How’s My Cash Flow? 1438 Format of the Statement of Cash Flows 1439 Steps in Preparation 1439 First Example—2011 1440 Step 1: Determine the Change in Cash 1441 Step 2: Determine Net Cash Flow from Operating Activities 1441 What Do the Numbers Mean? Pumping Up Cash 1443 Step 3: Determine Net Cash Flows from Investing and Financing Activities 1443 Statement of Cash Flows—2011 1444 Second Example—2012 1445 Step 1: Determine the Change in Cash 1445 Step 2: Determine Net Cash Flow from Operating Activities—Indirect Method 1445 Step 3: Determine Net Cash Flows from Investing and Financing Activities 1446 Statement of Cash Flows—2012 1447 Third Example—2013 1447 Step 1: Determine the Change in Cash 1448 Step 2: Determine Net Cash Flow from Operating Activities—Indirect Method 1449 Step 3: Determine Net Cash Flows from Investing and Financing Activities 1450 Statement of Cash Flows—2013 1450 Sources of Information for the Statement of Cash Flows 1451 Net Cash Flow from Operating Activities— Indirect versus Direct Method 1452 Indirect Method 1452 Direct Method—An Example 1452 Direct versus Indirect Controversy 1457 What Do the Numbers Mean? Not What It Seems 1458 SECTION 2 Special Problems in Statement Preparation 1459 Adjustments to Net Income 1459 Depreciation and Amortization 1459 Postretirement Benefit Costs 1459 Change in Deferred Income Taxes 1459 Equity Method of Accounting 1459 Losses and Gains 1460 Stock Options 1461 Extraordinary Items 1461 Accounts Receivable (Net) 1462 Indirect Method 1463 Direct Method 1463 Other Working Capital Changes 1464 Net Losses 1465 Significant Noncash Transactions 1465 What Do the Numbers Mean? Cash Flow Tool 1467 SECTION 3 Use of a Worksheet 1467 Preparation of the Worksheet 1469 Analysis of Transactions 1471 Change in Retained Earnings 1471 Accounts Receivable (Net) 1471 Inventory 1472 Prepaid Expense 1472 Investment in Stock 1472 Land 1472 Equipment and Accumulated Depreciation 1473 Building Depreciation and Amortization of Trademarks 1473 Other Noncash Charges or Credits 1473 Common Stock and Related Accounts 1474 Final Reconciling Entry 1474 Preparation of Final Statement 1476 FASB Codification 1478 IFRS Insights 1505 Chapter 24 Full Disclosure in Financial Reporting 1512 High-Quality Financial Reporting—Always in Fashion Full Disclosure Principle 1514 Increase in Reporting Requirements 1515 Differential Disclosure 1515 What Do the Numbers Mean? “The Heart of the Matter” 1516 Notes to the Financial Statements 1516 Accounting Policies 1516 Common Notes 1517 What Do the Numbers Mean? Footnote Secrets 1519 Disclosure Issues 1519 Disclosure of Special Transactions or Events 1519 Post-Balance-Sheet Events (Subsequent Events) 1521 Reporting for Diversified (Conglomerate) Companies 1522 Interim Reports 1528 What Do the Numbers Mean? “I Want It Faster” 1533 Auditor’s and Management’s Reports 1533 Auditor’s Report 1533 Management’s Reports 1536 Current Reporting Issues 1538 Reporting on Financial Forecasts and Projections 1538 Internet Financial Reporting 1541 What Do the Numbers Mean? New Formats, New Disclosure 1542 Fraudulent Financial Reporting 1542 What Do the Numbers Mean? Disclosure Overload 1544 Criteria for Making Accounting and Reporting Choices 1545 APPENDIX 24A Basic Financial Statement Analysis 1547 Perspective on Financial Statement Analysis 1547 Ratio Analysis 1548 Limitations of Ratio Analysis 1549 Comparative Analysis 1551 Percentage (Common-Size) Analysis 1552 FASB Codification 1554 IFRS Insights 1573 Index I-1