Top Acc_12_book.ind
TOP ACCOUNTING
ISSUES FOR 2012
CPE COURSE
CCH Editorial Staff Publication
ii TOP ACCOUNTING ISSUES FOR 2012 CPE COURSE
Contributors
Editor ................................. XXXXXXXXXXColleen Neuharth McClain, CPA
Contributing Editors ......................... XXXXXXXXXXSteven C. Fustolo, CPA
Technical Review ......................... XXXXXXXXXXSharon Brooks, CPA, MBA
Production Coordinator ................................ XXXXXXXXXXGa
iel Santana
Production ...................................................... XXXXXXXXXXLynn J. Brown
Layout and Design ........................................... XXXXXXXXXXLaila Gaidulis
This publication is designed to provide accurate and authoritative informa-
tion in regard to the subject matter covered. It is sold with the understanding
that the publisher is not engaged in rendering legal, accounting, or other
professional service. If legal advice or other expert assistance is required, the
services of a competent professional person should be sought.
ISBN XXXXXXXXXX
© 2011 CCH. All Rights Reserved.
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Chicago, IL XXXXXXXXXX
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www.CCHGroup.com
No claim is made to original government works; however, within this Prod-
uct or Publication, the following are subject to CCH’s copyright: (1) the
gathering, compilation, and a
angement of such government materials; (2)
the magnetic translation and digital conversion of data, if applicable; (3) the
historical, statutory and other notes and references; and (4) the commentary
and other materials.
Printed in the United States of America
iii
TOP ACCOUNTING ISSUES FOR 2012 CPE COURSE
Introduction
CCH’s Top Accounting Issues for 2012 CPE Course helps CPAs stay a
east
of the most significant new accounting standards and important projects.
It does so by identifying the events of the past year that have developed into
hot issues and reviewing the opportunities and pitfalls presented by these
changes. The topics reviewed in this course were selected because of their
impact on financial reporting and because of the role they play in under-
standing the accounting landscape in the year ahead.
Module 1 of this course reviews ongoing issues.
Chapter 1 focuses on the long-awaited Report to the Board of Trustees of
the Financial Accounting Foundation issued in January 2011 by the Blue Rib-
on Panel on Standard Setting for Private Companies. This Report provides
ecommendations on how to deal with accounting standards for private com-
panies. This chapter distills the recommendations into a digestible source that is
designed to assist accounting practitioners in putting these proposed principles
into practice.
Chapter 2 discusses ASC 740, Income Taxes (formerly FAS 109), which
has been around for almost two decades. Yet, there are several key issues related
to defe
ed income taxes that exist because of the recent economic climate and
changes proposed by health care reform. This chapter addresses those issues which
consist of defe
ed income tax assets from net operating losses (NOLs) and the
need for valuation accounts, and defe
ed income taxes due to the change in the
Patient Protection and Affordable Care Act (PPACA).
Chapter 3 covers the Statement of Cash Flows, which over the past decade,
has come under scrutiny by investors and other third parties. Once focusing on
the statement of income as the primary course of assessing financial performance,
greater emphasis has been placed on cash flow. This chapter explains some of
the most common complaints and what the problem is with existing practice
when reporting the Statement of Cash Flows.
Chapter 4 distills the proposed changes to loss contingency disclosures, climate
change disclosures and the overall politics regarding disclosures and is designed to
assist accounting practitioners in putting these principles into practice.
Module 2 of this course reviews financial statement reporting.
Chapter 5 discusses the recently proposed authoritative literature regarding
financial performance reporting and is designed to assist accounting practitioners
in putting these proposed principles into practice.
Chapter 6 focuses on the authoritative literature on the fair value option
for financial assets and financial liabilities and is designed to assist accounting
practitioners in putting these principles into practice.
iv TOP ACCOUNTING ISSUES FOR 2012 CPE COURSE
Chapter 7 reviews the recently proposed authoritative literature regarding
lease accounting to assist accounting practitioners in putting these proposed
principles into practice.
Module 3 of this course covers cu
ent developments.
Chapter 8 distills an analysis of selected ASUs issued in XXXXXXXXXXand
is designed to assist accounting practitioners in putting these principles into
practice.
Chapter 9 reviews how since 1980, there has been a significant shift away
from defined benefit plans with a drop to less than 20 percent of the workforce
cu
ently covered by such plans. The move was gradual until two significant
changes occu
ed that have motivated companies to eliminate or freeze their
defined benefit plans. This chapter distills these changes into a digestible source
that is designed to assist accounting practitioners in better understanding the
demise of defined benefit pension plans.
Chapter 10 discusses how the FASB is suggesting that the historical cost
model no longer works and needs to be replaced or repaired with a fair value
model whenever assets and liabilities can be reliably measured at fair value. How-
ever, there are arguments for and against a fair value system. This chapter distills
an analysis of those arguments and is designed to assist accounting practitioners
in understanding this controversy.
Throughout this course you will find Examples and Observations to illustrate
the topics covered and assist you with comprehension of the course material, as
well as Study Questions to help you test your knowledge. Answers to the Study
Questions, with feedback on both co
ect and inco
ect responses, are provided
in a special section beginning on page 271. To assist you in your later reference
and research, a detailed topical index has been included for this course, begin-
ning on page 295.
This course is divided into three Modules. Take your time and review each
course Module. When you feel confident that you thoroughly understand the
material, turn to the CPE Quizzer. Complete one or all Module Quizzers for
Continuing Professional Education credit. You can complete and return the
Quizzers to CCH for grading at an additional charge. If you receive a grade
of 70 percent or higher on the Quizzers, you will receive CPE credit for the
Modules graded. Further information is provided in the CPE Quizzer Instruc-
tions on page 305.
August 2011
v
COURSE OBJECTIVES
This course provides an overview of important accounting developments.
At the completion of the course, the reader will be able to:
Compare the arguments in favor of and against Big GAAP-Little GAAP and
the Blue Ri
on Panel Report
Discuss defe
ed income tax assets from NOLs and the need for valuation ac-
counts, and
Describe the impact on accounting for defe
ed income taxes due to the change
in the Patient Protection and Affordable Care Act (PPACA).
Describe the difference between using the direct and the indirect method
List some of the more common criticisms regarding existing cash fl ow report-
ing practices
Discuss some of the most common abuses in the statement of cash fl ows
Discuss the presentation of cash from operations versus working capital fl ow
Describe the proposed changes to loss contingency disclosures
List and discuss the 12 recommended principles for the Comprehensive Busi-
ness Reporting Model
Identify the formula used to compute free cash fl ow
Compute the four key ratios used to analyze working capital
Compute days sales outstanding (DSO) and average days delinquent (ADD)
Describe how core earnings is computed
List ways in which companies recognize revenue prematurely
Describe the three-level fair value hierarchy for valuation
Describe the general rules of the fair value measurement option
Identify the disclosure requirements for fair value measurements
Describe the effect of the proposed new lease standard on fi nancial statements
Explain how a lessee must account for initial direct costs incu
ed in connection
with a lease under the proposed standards
Explain how the proposed new lease standard may affect fi nancial ratios
Describe the accounting for fair value measurements and disclosures for invest-
ments in certain entities that calculate net asset value per share
Recite the requirements of the selected ASUs in this course including the ac-
counting for revenue recognition with multiple-deliverable revenue a
ange-
ments, revenue a
angements that contain tangible products and software,
noncontrolling interests and changes in ownership interests of a subsidiary,
subsequent events, loans to participants by defi ned contribution pension plans
and disclosure requirements related to fair value measurements.
Discuss the U.S. shift away from company pensions toward IRAs
Discuss the status of the FASB fair value project
Argue for and against fair value measurement
vi TOP ACCOUNTING ISSUES FOR 2012 CPE COURSE
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