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THE UNIVERSITY OF TEXAS AT AUSTIN

ACC 326 Syllabus – Spring 2015 Class Meetings MW 11:00 a.m. – 12:15 p.m. in UTC 3.110 (unique number 02270) MW 12:30 p.m. – 1:45 p.m. in UTC 3.110 (unique number 02280) Instructor Robert Freeman E-Mail Robert.Freeman@mccombs.utexas.edu Phone 512-471-5332 Office CBA 3.226 Office Hours 2:00 p.m. – 3:30 p.m. on Mondays Assistant Bari Rabinovich E-Mail bari.rabinovich@bba10.mccombs.utexas.edu Phone 956-648-6952 Office CBA 3.226 Office Hours Assistant E-Mail @bba10.mccombs.utexas.edu Phone Office CBA 3.226 Office Hours

COURSE OBJECTIVES ! Become more familiar with financing, investing, and operating activities of business entities ! Understand how these activities are treated under general accepted accounting principles ! Establish the ability to evaluate financial statements This course is designed for students whose careers are likely to require frequent use use of financial statements issued by publicly held corporations. Learning to use financial reports is a two step process: (1) understand how a company’s operating and financing transactions create corporate wealth and risk; (2) develop an intuitive feel for when and how financial reports communicate the prospective and final outcomes of transactions. To a large extent, the first step is addressed in introductory business courses (e.g., introductory accounting, economics, and finance courses), but it is also a secondary objective of this course. The second step is also addressed in introductory accounting courses for routine transactions of fairly simple business enterprises. The primary objective of this course is to build upon these introductory courses by learning how Basic Financial Statements and Earnings per Share are affected by additional business transactions (e.g., Mergers and Acquisitions, Foreign Operations, Obligations for Post Retirement Benefits, Complex Financial Instruments, Hedging Activities, Accounting Changes).

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COURSE MATERIALS Required reading material

Freeman: Course Notes Hard copy available for purchase from GSB Central Duplicating and electronic copy available on Canvas. The notes are a more detailed version of material that we discuss in class – including detailed examples and self-testing exercises. Spiceland: Intermediate Accounting (7th Edition) by Spiceland, Sepe, and Nelson (McGraw-Hill / Irwin, 2013). A custom-published, soft-bound textbook with selected chapters that we will cover in this class is available at the co-op bookstore. Used copies of the full hard-back textbook are available on the web. Electronic versions are available from the publisher at www.corsesmart.com and search by title. Check figures, practice exams, annual reports, FASB Updates, etc. are available at http://highered.mcgraw-hill.com/sites/007802532x/student_view0/index.html.

Hamlen: Advanced Accounting (2nd Edition) by Hamlen, Huefner, and Largay (Cambridge Business Publishers, 2013). We will cover chapters 1 through 5 of this book. The first two chapters are available in electronic form from the publisher at no cost to students – download in pdf in the M&A Module or download from www.combridgepub.com, click on catalog, click on advanced accounting, click on the HHL Advanced Accounting cover (on the left of screen), click on TOC, click on download icons next to chapters 1 and 2. Chapters 3, 4, and 5 are available at the co-op bookstore (ISBN 9781618530509).

Supplemental reading material The Wall Street Journal EDGAR The Security and Exchange Commission’s financial statement data base. Available under the “Filings” menu at http://www.sec.gov/. FASB Financial Accounting Standards Board (FASB) documents available to UT students at http://aaahq.org/ascLogin.cfm with Username AAA51055 and Password HqhxVke.

Canvas Grades and most course-related materials will be posted to Canvas. Solutions to required homework, recommended homework, quizzes, and exams will be posted to Canvas.

Recommended Exercises and Problems There is a lot of material in the textbooks and Course Notes. Class discussions will emphasize important transactions and include examples that show how those transactions affect financial statements, but we will not cover enough problem material in class to adequately prepare you for the exams. You are encouraged to work as many problems from the textbooks and Course Notes as your schedule permits. The last page of the syllabus lists additional recommended problems from the Spiceland and Hamlen textbooks that are related to the materials emphasized in class. Course Notes also contain additional old exam problems that are recommended, but not required. Solutions to all recommended problems are available on the course Canvas site.

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COURSE GRADES Letter grades for the course conform to McCombs guidelines for “business major core classes” – that is, class average GPA of 3.3. The target-GPA is a guideline, not a fixed rule. Last spring the grade distribution was roughly 25% A, 10% A−, 10% B+, 40% B, 15% B− and below. To determine letter grades for the course, I rank all students from highest to lowest based on the weighted average of quizzes, homework, and exams. I draw lines between A and A−, and between A− and B+, etc., to achieve an average GPA near 3.3.

Homework – drop two lowest scores 15% Quizzes – drop two lowest scores 15 Mid-term exam 30 Comprehensive Final Exam 40 Total 100%

HOMEWORK To encourage you to develop exam skills, selected problems from the Course Notes and the Hamlen textbook will be graded. You will receive full credit for an assignment if the grader concludes that you made a reasonable effort. Twelve required homework assignments are listed below. We drop the lowest two scores, so you receive full credit for completing homework for ten of the twelve topics. Submit homework by uploading your solution in docx, xlsx, or pdf format to the Assignments page in Canvas. Solutions are due no later than 5:00 p.m. on the due date. Late homework receives half credit. Solutions to required problems will be posted to Canvas after the due dates.

Due Date

Topic

Problems in Freeman Course Notes

Exercises (E) & Problems (P) in

Hamlen Textbook January 30 Income Statement IS2, IS3 February 6 Income Taxes IT4, IT5, IT6 February 13 Accounting Changes AC2, AC6 February 20 Cash Flow Statement CF2 February 27 Debt Securities DS5, DS6 March 6 Equity Securities ES2, ES3 March 27 Leases & Securitizations LE3, LE5,SV5, SV8 April 6 Derivatives & Hedging DH2, DH4 April 10 Pensions PN3, PN4 April 17 Stock Compensation SC2, SC3 April 24 Earnings per Share EPS2, EPS3 May 1 Mergers & Acquisitions E3- 7 and P3- 2 May 8 Post Acquisition Fin St P4- 1 and P5- 1

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QUIZZES We will have at least six unannounced in-class quizzes. Your two lowest quiz scores will be dropped. There are no make-up quizzes. Quiz scores and solutions will be posted to Canvas.

EXAMS There will be two exams. If you miss the mid-term exam and have a valid reason for missing it, we will place additional weight on the final. If you miss the final exam and have a valid reason for missing it, we will arrange for you to take a make-up exam. If you do not have a valid reason for missing an exam, you will receive a zero on the exam (which usually results in a failing grade for the course).

Mid-Term Exam Tuesday, March 10

6:00 – 9:00 p.m. in UTC 3.110, 3.112, and 3.122

Comprehensive Final Exam The final exam schedule will be available at

http://registrar.utexas.edu approximately one month before the end of the semester.

Exam performance is directly related to systematic preparation, which includes timely completion of suggested homework (including suggested problems that are not turned in for grading). Since this course moves quickly, you cannot afford to fall behind on readings or problems. You will have difficulty solving problems unless you complete the assigned readings and work through the examples in the class notes. Skill in solving problems from the textbooks and class notes will be tested on exams.

Honor Code Collaboration is strongly encouraged outside of class. However, homework must be completed independently, and the sharing of electronic files for homework and collaboration on exams is strictly prohibited. Disabilities The University provides, upon request, appropriate academic accommodations for students with qualified disabilities. Fro information, contact the Office of the Dean of Students at 471-6259, 471-4616 TTY.

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ACC  326  –  SPRING  2015  CLASS  SCHEDULE  Class Dates  

Readings in Course Notes (Problems in Course Notes)

Materials in Spiceland (S) and Hamlen (H) Chapters Recommended Exercises [E] & Problems [P]

Prerequisite The Accounting Process & Balance Sheet S: 1, 2, 3 E2- 1, 7, 8, 11, 14; E3- 5, 15, 16; P3- 5, 10 1/21 Financial Accounting and Firm Value No textbook reading or problem assignments. Reading in Class Notes. 1/26 & 28 Income Statement (IS) S: 4A, 5A, 11B E4- 3, 5, 6, 7; P4- 2, 8; E5- 11, 13; P5- 5 2/2 & 4 Income Taxes (IT) S: 16 E16- 2, 5, 10, 15, 22, 26; P16- 4, 7, 9, 10 2/9 & 11 Accounting Changes & Error Corrections (AC) S: 11B, 20 E11- 18, 19; P20- 2, 13 216 & 18 Statement of Cash Flows (CF) S: 4B, 21 E21- 2, 9, 14, 17, 21; P21- 6 2/23 & 25 Issuing and Investing in Debt Securities (DS) S: 14, 12A E14- 2, 17, 21, 32; P14- 9, 24; E12- 5, 12, 26; P12- 1 3/2 & 4 Issuing and Investing in Equity Securities (ES) S: 18A, 18B, 12 E18- 5, 11, 13; E12- 15, 16; P12- 5, 6, 12 3/9 Review for Mid-Term Exam – attendance optional Tuesday 3/10 Mid-Term Exam, 6:00-9:00 pm. UTC 3.110, 3.112, and 3.122. Room assignments to be announced on Canvas.

3/11 No class meeting 3/16 & 18 Spring Break 3/23 Leases S: 15 E15- 4, 5, 6, 10, 27, 29, 31; P15- 8, 11, 16 3/25 Securitizations & VIEs (SV) S: 7B Problems in Class Notes only, no Spiceland problems. 3/30 & 4/1 Derivatives and Hedging (DH) S: Appendix A EA- 2, 3; PA- 1, 2 4/6 & 8 Pensions & Other Post-Employment Benefits (PN) S: 17 E17- 10, 12, 13; P17- 4, 9; E21- 28 4/13 & 15 Stock-Based Compensation (SC) S: 19A E19- 5, 6, 7, 16, 27, 28; P19- 1, 5, 8 4/20 & 22 Earnings per Share (EPS) S: 18C, 19B E18- 10, 19, 20; P18- 9; E19- 15, 18, 19; P19- 14 4/27 & 29 Mergers and Acquisitions Overview (MA) H: 1, 2, 3 E2- 2, 3, 5, 8, 9, 10; P2- 2, 9; E3- 1, 10, 11; 5/4 & 6 Post-Acquisition Consolidation (PA) H: 3, 4, 5 P3- 3, 4, 10; E4- 3, 11; P4- 4,10; E5- 1, 6; P5- 4 5/6 Foreign Operations (FO) No problem assignments. No textbook readings. Reading in Class Notes. TBA Final Exam – comprehensive