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This case pertains to the interplay of cost accounting, performance measurement, and financial reporting issues in Toshiba's semiconductor business. It addresses how Toshiba manipulated its reported profits by inappropriately allocating its budgeted fixed overheads and not recognizing inventory losses in a timely manner in the financial statements. These manipulations overstated profits of the semiconductor business by ¥36.0 billion, almost a quarter of the total of Toshiba Corporation's ¥151.8 billion profit overstatement. The investigation report indicated that the profit manipulations were a likely outcome of top management's unrealistic expectations. For the semiconductor business of Toshiba, the timely recognition of inventory losses would have offset the profit misstatements resulting from the inappropriate allocation of budgeted fixed overheads. Alternatively, proper allocation of budgeted fixed overheads would have reduced or even avoided the need to recognize inventory losses. The case provides an integrative view of cost and financial accounting. [ABSTRACT FROM AUTHOR]

SYNOPSIS: In October 2019, the Financial Reporting Policy Committee of the Financial Accounting and Reporting Section of the American Accounting Association submitted a comment letter to the Financial Accounting Standards Board regarding the accounting for certain identifiable intangible assets acquired in a business combination and subsequent accounting for goodwill. This paper summarizes the content of the comment letter and discusses opportunities for future research on intangible assets that may inform accounting standard-setting decisions. JEL Classifications: M40. [ABSTRACT FROM AUTHOR]

ABSTRACT: This case presents a multifaceted, decision-oriented context to assess the appropriateness of accounting policy for ensuring a faithful representation of underlying economic reality, it will enhance your: (1) appreciation [...]

This case provides an experiential learning opportunity to (1) appreciate the role of professional judgment in accounting policy choices, (2) evaluate the effect of accounting decisions on other business functions, and (3) understand the challenges in transitioning to a new accounting policy. Prestige's previous auditors had allowed the use of output-based measure (milestones completed) to compute the percentage-of-completion (POC) for its long-term construction contracts. The newly appointed auditors recommended switching to input-based measures (costs incurred) to compute POC. Students must choose the appropriate financial reporting policy, considering accounting and non-accounting issues. The case addresses an important context because almost one in every eight large 500 companies is engaged in long-term construction contracts (AICPA 2013). Although the case setting is in India, it can be used in any country given its GAAP-agnostic nature. The case is best suited for intermediate accounting courses in which the topic of revenue recognition is addressed. [ABSTRACT FROM AUTHOR]

This real-world comprehensive case provides an experiential assignment to bring alive most major topics addressed in the financial statement analysis and valuation course. By demonstrating the interconnections between different topics, the case also serves as an integrative assignment to develop a holistic understanding of the course. The case presents a platform to develop students' critical-thinking and problem-solving skills. By requiring them to apply the frameworks of strategy and industry analysis, techniques of accounting and financial analysis, and by placing them in the role of a financial analyst, the case develops an understanding of the challenges involved in financial analysis and valuation in a real-world context. The case helps students to experience the power of using financial statements and other publicly available information to derive insights into firm valuation and to appreciate the role of accruals-based and real earnings management in stock valuation. [ABSTRACT FROM AUTHOR]

PAUL HOLT CHERYL HEIN, International Accounting, Fourth Edition (Houston, TX: Dame Publications, Inc., 1999). A slim accounting textbook falls under the category of species reaching extinction. Thus, I embraced eagerly [...]

Vodafone is recognized globally as a seminal case in which the taxation of indirect transfer of shares was litigated before a country's highest judicial court. Vodafone Group plc, through a web of its directly and indirectly owned subsidiaries in different tax jurisdictions, acquired a majority interest in Hutchison Essar, an Indian telecommunications company. For failing to withhold taxes, the Indian Revenue Service has assessed $5 billion in taxes and penalties on Vodafone. Whether India's position to tax indirect transfer of shares between two non-Indian entities is consistent with the practices of OECD countries such as the U.S. and whether such tax measures help economic competitiveness are hotly debated topics. The case can be used in a graduate course in international taxation, or in a capstone course to address the topics of tax research and tax policy. It helps students to (1) research tax literature in the U.S. and a foreign country and apply it to a real-world context, (2) understand a complex acquisition transaction and its tax ramifications, (3) determine whether a similar transaction would be taxable in the Organisation for Economic Co-operation and Development (OECD) countries, and (4) evaluate the pros and cons of taxing the transfer of shares between two foreign entities by tax authorities. [ABSTRACT FROM AUTHOR]

Diamond Foods is a comprehensive case that provides an opportunity for students to apply several financial auditing concepts and professional auditing standards to a real-world context. Diamond overstated its earnings of fiscal 2010 and 2011, by 38 percent and 47 percent, respectively, by delaying recognition of the cost of walnuts acquired to later accounting periods. The case requires students to determine whether Diamond's external auditor--Deloitte & Touche, LLP (Deloitte)--fulfilled its responsibility to obtain reasonable assurance that the financial statements were free of material misstatement. Students need to determine whether Deloitte's issuance of an unqualified opinion on Diamond's financial statements and internal controls violated professional auditing standards. In addition, students are required to evaluate whether Deloitte obtained sufficient understanding of Diamond's business and industry, exercised the needed professional skepticism, and used appropriate analytical procedures to discharge its professional responsibilities. The case presents an opportunity to achieve several learning objectives, including the development of research, critical-thinking, communication, and problem-solving skills. The case is appropriate for use in a graduate or undergraduate course in financial auditing. It can also be used in a fraud examination course, or in a capstone course in the accounting curriculum. [ABSTRACT FROM AUTHOR]

Diamond Foods is America's largest walnut processor specializing in processing, marketing, and distributing nuts and snack products. This real-world case presents financial reporting issues around the commodities cost shifting strategy used by Diamond's management to falsify earnings. By delaying the recognition of a portion of the cost of walnuts acquired into later accounting periods, Diamond Foods materially underreported the cost of sales and overstated earnings in fiscal 2010 and 2011. The primary learning goal of the case is to help students understand the anatomy and motivations of earnings manipulation. Specifically, students will have the opportunity to (1) apply the FASB's Conceptual Framework to a real-world context, (2) determine the nature of errors and compute their numerical effects on financial statements, (3) understand motivations for earnings management and actions needed for managing earnings of future years, (4) explain the anatomy of financial reporting fraud by reconstructing journal entries, (5) prepare comparative financial statements for retroactive restatements, (6) explain the rationale for clawback provisions in compensation contracts, and (7) understand the difference between the real and accrual-based earnings management. [ABSTRACT FROM AUTHOR]

With increasing global convergence of accounting standards, integration of International Financial Reporting Standards (IFRS) materials in accounting curricula is gaining growing attention worldwide. The Spectacular Airlines case provides an opportunity for you to develop critical thinking skills by requiring you to apply basic accounting concepts to account for customer loyalty programs. It then asks you to identify and apply professional accounting literature to address accounting issues faced by the potential acquirer of Spectacular. Specifically, the case addresses the liability and revenue recognition issues for the frequent flyer plans of airlines, a context in which multiple conceptual approaches are possible and diverse accounting practices are followed. The case helps you to (1) improve your understanding of the importance of financial reporting issues in the context of a real-world business decision, such as cross-border mergers and acquisitions (M&A), (2) research U.S. GAAP and IFRS for addressing revenue recognition issues for customer loyalty programs, (3) understand complexities in the application of an accounting standard in a real-world setting, and (4) evaluate the effects of transition from the local GAAP to IFRS on businesses, their financial statements and ratios. [ABSTRACT FROM AUTHOR]

Explores management's choice of transition method and adoption timing in its shift to the Statement of Financial Accounting Standards No. 96 (SFAS 96) on income taxes. Desire to manage earnings as a motivation in the transition.

Presents a case study of accounting for frequent flyer plans to analyze financial reporting problem using the Generally Accepted Accounting Principles (GAAP). Definition of the problem; Prevalence and financial significance of the problem; Getting familiar with industry, financial reporting environment and accounting practices; Development of objective criteria; Solution approach.

This article discusses various theoretical and practical issues related to purchase commitments and recommends a unifying framework to guide accounting and disclosure practices. Many businesses enter into contracts to purchase goods at fixed prices in order to ensure a continued supply of the goods or as a hedge against price increases. During the period that such contracts are outstanding, fluctuations in the prices of the underlying goods can have significant effects on the financial statements. The accounting literature provides no single comprehensive discussion of the issues involved in accounting for purchase commitments. This has led companies to adopt widely varying practices. A review of the financial statements indicates that many of the reported losses on purchase commitments have had a substantial impact on companies' net incomes. While accounting for purchase commitments may not be a very widespread problem, it is a problem that can have a significant effect on a company's bottom line and has largely been neglected by accounting policy makers. This article recommends solutions to problems in accounting for purchase commitments.