|This course is designed to increase your ability to be a sophisticated user of financial statements. After taking this course, you should improve your ability to determine a firm's accounting policy for a particular type of transaction and to determine how that policy choice affects its primary financial statements. You will also learn how to question whether these effects fairly reflect the underlying economics of the firm's transactions. Asking these questions involves an interplay between accounting, economics, finance and strategy. You should therefore improve your ability to use an accounting report as part of an overall assessment of the firm's strategy and the potential rewards and risks of dealing with the firm.
This course covers a less specialized set of financial reporting topics than does Business 30117. The technical knowledge acquired is applied to cases where the main goal is to examine how the reported financial statements would differ if the firm had used different accounting policies. The focus is on modifying the reported financial statements in order to obtain the cleanest possible inputs for use in such applications as equity valuation, transaction structuring and credit analysis. This course does not take the next steps of trying to project the firm's future economic condition and value the firm. These applications are emphasized in Business 30130.
Topics to be discussed in this course include the accounting for: income taxes, revenue recognition, securitization, intercorporate investments, organizational structures (e.g., franchising), debt, leases, and employee stock options. Intensive group hand-in cases will be used to illustrate how the flexibility in financial reporting can reflect both the economics of the firm and the incentives of the managers creating the financial statements.
The course is likely to be useful to those preparing to take the CFA exams or the CPA exam.