Faculty
Professor Phillip C. Stocken
Objectives
This course is designed to increase your ability to extract and interpret information in financial statements. It should improve your ability to use the disclosures in a firm's financial report to determine its accounting policy for more complex types of transaction and to determine how that policy choice both affects its primary financial statements and reflects the underlying economics of the firm. This course should also improve your ability to use financial statements as part of an overall assessment of the firm's strategy and the potential rewards and risks of dealing with the firm as an investor or creditor.
The course begins by reviewing firms' basic accounting policy choices. Thereafter, the course emphasizes transactions that affect Other Comprehensive Income: namely, Marketable securities, Foreigh Operations, Derivatives and hedging, and Pension and Other post-employment benefits.
This course assumes a solid understanding of the material covered in the core financial accounting course—Financial Measurement, Analysis and Reporting.
Requirements
Class Preparation, Participation, and Homework
Class preparation consists of reading the class notes and textbook and preparing problems and cases in the course packet.
The most important requirements for this course are thorough preparation and analysis of the reading material and the assigned problems and cases. The class is structured so that for most topics, we will discuss the conceptual issues and work through an example before we analyze a more detailed problem or case; the assigned problems and cases are denoted by an asterisk in the attached Assignment Schedule.
My expectation is that you will come to class having already analyzed the assigned problem or case. You are expected to actively participate in the discussion of the assigned problem or case. When analyzing the assigned problem or case, I will cold-call to insure that everyone in the class has an opportunity to participate. There will be no penalties for “wrong” answers; rather, it is the attempt to thoughtfully reason or to ask a pertinent question that is valued and adds to the classroom experience for everyone.
You will be required to hand in solutions to the assigned problems or cases at the end of the class session in which the assigned problem is discussed. While you should feel free to seek assistance with these assignments and to discuss them with other students in the class, you are individually responsible for turning in each assignment. Grading of the homework will be based on effort and completeness, rather than on accuracy; consequently, it is important to attempt to answer all questions.
Materials
Course pack:
A course packet of readings, cases and other materials obtainable from the Tuck copy center.
Textbooks:
(1) Revsine, Collins, and Johnson, Financial Reporting & Analysis, 4th edition, (McGraw-Hill Irwin). This text is an excellent reference on accounting and disclosure topics. It also contains explanations of most of the financial statement analysis issues we address. The relevant reading from this textbook will be included in the course packet.
(2) Stickney and Weil, Financial Accounting: An Introduction to Concepts, Methods, and Uses, 12th edition (Thomson/Southwestern). This textbook was prescribed for the core course—Financial Measurement, Analysis and Reporting.
Though not necessary for the course, the 2007 Miller GAAP Guide: Restatement and Analysis of Current FASB Standards, available on Amazon.com, is an excellent technical reference for those entering careers involving financial analysis.
Attendance
You are expected to attend all classes in the section to which you are assigned unless emergencies prevent you from doing so. You are also expected to notify your instructor in advance of any absences. Failure to attend and participate in classes will adversely affect your course grade.
Honor Code
We believe that the Academic Honor Code is a critical aspect of the learning environment at Tuck. The prevalence of group work is consistent with the School's philosophy that much of your education here will come from each other, and I encourage you to discuss all problems and cases with your group prior to coverage in class. At the same time, it is essential for you to work through the material on your own to master it and to solidify your understanding. (One common mistake is overly relying on group members in the learning process.) Thus, the final write-up of problems and cases -- either to hand in or to present in class -- should be your own individual work (i.e., do not simply copy your group's solution to a problem or case). The desirable sequence is for you to read and prepare the assigned materials on your own before getting together with your study group. As a result of discussions within your study group, you can make changes to your initial analysis. You should then go back and do final editing of your solution on your own without additional help from study group members. There should never be a unique solution that is essentially identical by all members of the study group. You may make corrections to problem sets as we discuss them in class, but please use a different color of ink or pencil. If you have any questions about how the Honor Code applies to any other aspect of this course, please ask.
Grading
Your course grade will be determined as follows:
Class Participation 25%
Homework 25%
Take-home Exam 50%
Take-home Exam
A take-home exam will be distributed at the end of class on Wednesday, February 4th. It is a timed, four hour exam. The exam must be handed in on Monday February 9 by 4:00 pm.
You must work on the take-home exam individually. You are not permitted to discuss the exam with anyone else, including other students, former students, or people off campus. You are permitted, however, to use any written resource, such as your class notes, the textbook, and information on the company you find on the web, etc.
Grading disputes
You may disagree with the point allocation on problems, cases, and the exam. All grading disputes must be appealed within one calendar week following the return of the assignment or exam (unless otherwise noted). To have a case or exam re-graded, you must submit the original case or exam (with no modifications) and a written description of your disagreement with the initial grade. I reserve the right to review the entire case or exam; thus your grade could go up or down.
Office Hours
By apppoinment; e-mail is the best way to contact me to schedule office visits.
Schedule
Invalid Date 01/01/2009
KEY
SW=Stickney and Weil, 12th Edition
RCJ=Revsine, Collins, and Johnson, 4th Edition
CP=Course Pack
* = Problem or case to be handed in
Session 1
Thursday
01/08/2009
Accounting Principal Choice & Comprehensive Income
SW: Chapter 14
CP reading: Accounting Principle Choice & Comprehensive Income
Case: Synthesis*
Session 2
Friday
01/09/2009
Passive Investments
SW: Chapter 11 pp. 513-524
CP reading: Marketable securities and Other investments
Practice Problem: Dell Computers
Session 3
Wednesday
01/14/2009
Active Investments
SW: Chapter 11 pp. 529-543 and Appendix 11.1
Practice Problem: Bristol-Myers & Squibb; Veterinary Centers of America
Case: Coca-Cola Company-Marketable securities*
Session 4
Thursday
01/15/2009
Foreign Currency Translations
RCJM: Chapter 16, pp. 968-975
CP Reading: Measuring Foreign Activities
Practice Problem: Hyperana Co.
Session 5
Thursday
01/22/2009
Foreign Currency Translations (continued)
Case: Machinery International (A)* HBS 9-100-012
Session 6
Friday
01/23/2009
Derivatives
RCJM: Chapter 11, pp. 632-649
CP Reading: Derivatives
Practice Problems: Global Candy
Session 7
Wednesday
01/28/2009
Derivatives (continued)
Case: Coca-Cola Company - Accounting for Derivatives*
Session 8
Thursday
01/29/2009
Pensions & Other Post Employment Benefits
RCJM: Chapter 14
CP Reading: Pension & Other Post Employment Benefits
Practice Problems: Atomic Inc.
Session 9
Wednesday
02/04/2009
Pensions and Other Post Employment Benefits (cont.)
Case: FedEx Corporation*
Monday
02/09/2009
Take-home exam due at 4:00 pm
