Financial Accounting, 8th Edition

1268 Pages·2016·33.208 MB·English

by  Craig Deegan

Craig Deegan’s Financial Accounting 8e continues to be the market-leading and most F
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presentation, the conceptual framework for financial reporting, accounting for leases,
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revenue recognition, financial instruments and corporate social responsibility reporting
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Financial Accounting
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To my beautiful daughter Cassie for being the
best daughter a dad could ever have
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Craig Deegan
Financial Accounting
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National Library of Australia Cataloguing-in-Publication Data
Author: Deegan, Craig Michael
Title: Financial accounting / Craig Michael Deegan.
Edition: 8th edition.
ISBN: 9781743764022 (pbk.)
Notes: Includes index.
Subjects: Accounting—Australia.
Accounting—Standards—Australia.
Financial statements—Standards—Australia.
Dewey Number: 657.021894
Published in Australia by
McGraw-Hill Education (Australia) Pty Ltd
Level 2, 82 Waterloo Road, North Ryde NSW 2113
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abouT The auThor
Craig Deegan
CRAIG DEEGAN, BCom (University of NSW), MCom (Hons)
(University of NSW), PhD (University of Queensland), FCA,
is Professor of Accounting in the School of Accounting
at RMIT University in Melbourne. Craig has taught at
both undergraduate and postgraduate level for about
three decades. Prior to working in the university sector
Craig worked as a chartered accountant. His research
has tended to focus on various social and environmental
accountability and financial accounting issues and has been
published in a number of leading international accounting
journals, including: Accounting, Organizations and
Society; Accounting and Business Research; Accounting,
Accountability and Auditing Journal; Accounting and
Finance; British Accounting Review; Critical Perspectives
on Accounting; Journal of Business Ethics; Australian
Accounting Review; and The International Journal of
Accounting. According to Google Scholar, Craig’s work accounting journals and he has been the recipient
has attracted approximately 12,000 citations making him of various teaching and research awards, including
one of the most highly cited researchers internationally teaching prizes sponsored by KPMG, and the Institute of
within the accounting and/or finance literature. Chartered Accountants in Australia. He was the inaugural
Craig has regularly provided consulting services recipient of the Peter Brownell Manuscript Award, an
to corporations, government, and industry bodies on annual research award presented by the Accounting and
issues pertaining to financial accounting and corporate Finance Association of Australia and New Zealand. He
social and environmental accountability, he was former was also awarded the University of Southern Queensland
Chairperson of the Triple Bottom Line Issues Group of Individual Award for Research Excellence.
the Institute of Chartered Accountants in Australia, for Craig is also the author of the leading financial
a number of years was involved in developing the CPA accounting theory textbook, Financial Accounting Theory,
Program of CPA Australia, and for many years was a now in its fourth edition. Financial Accounting Theory is
judge on the Australian Sustainability Reporting Awards. widely used throughout Australia as well as in many other
He is on the editorial board of a number of academic countries.
abouT The auThor v
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ConTenTs in brief
PART 1 THE AUSTRALIAN ACCOUNTING ENVIRONMENT 1
Chapter 1 an overview of the australian external reporting environment 2
Chapter 2 The conceptual framework for financial reporting 48
PART 2 THEORIES OF ACCOUNTING 83
Chapter 3 Theories of financial accounting 84
PART 3 ACCOUNTING FOR ASSETS 139
Chapter 4 an overview of accounting for assets 140
Chapter 5 Depreciation of property, plant and equipment 180
Chapter 6 revaluations and impairment testing of non-current assets 202
Chapter 7 inventory 234
Chapter 8 accounting for intangibles 258
Chapter 9 accounting for heritage assets and biological assets 300
PART 4 ACCOUNTING FOR LIABILITIES AND OWNERS’ EQUITY 343
Chapter 10 an overview of accounting for liabilities 344
Chapter 11 accounting for leases 376
Chapter 12 accounting for employee benefits 427
Chapter 13 share capital and reserves 457
Chapter 14 accounting for financial instruments 481
Chapter 15 revenue recognition issues 548
Chapter 16 The statement of profit or loss and other comprehensive income,
and the statement of changes in equity 585
Chapter 17 accounting for share-based payments 625
Chapter 18 accounting for income taxes 656
PART 5 ACCOUNTING FOR THE DISCLOSURE OF CASH FLOWS 695
Chapter 19 The statement of cash flows 696
PART 6 INDUSTRY-SPECIFIC ACCOUNTING ISSUES 741
Chapter 20 accounting for the extractive industries 742
PART 7 OTHER DISCLOSURE ISSUES 779
Chapter 21 events occurring after the end of the reporting period 780
Chapter 22 segment reporting 794
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Chapter 23 related party disclosures 820
Chapter 24 earnings per share 839
PART 8 ACCOUNTING FOR EQUITY INTERESTS IN OTHER ENTITIES 869
Chapter 25 accounting for group structures 870
Chapter 26 further consolidation issues i: accounting for intragroup transactions 924
Chapter 27 further consolidation issues ii: accounting for non-controlling interests 966
PART 9 FOREIGN CURRENCY 1007
Chapter 28 accounting for foreign currency transactions 1008
Chapter 29 Translating the financial statements of foreign operations 1028
PART 10 CORPORATE SOCIAL-RESPONSIBILITY REPORTING 1049
Chapter 30 accounting for corporate social responsibility 1050
ONLINE CHAPTERS
Chapter 31 further consolidation issues iii: accounting for indirect ownership interests
Chapter 32 accounting for investments in associates and joint ventures
Appendix A Present value of $1 1122
Appendix B Present value of an annuity of $1 1124
Appendix C Calculating present values 1126
ConTenTs in brief vii
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ConTenTs in fuLL
about the author v
Contents in brief vi
Preface xvii
acknowledgments xviii
aaCsb statement xix
how to use this book xx
Digital resources xxii
Credits xxiv
PART 1 The ausTraLian aCCounTinG environMenT 1
CHAPTER 1 an overvieW of The ausTraLian eXTernaL rePorTinG environMenT 2
Accounting, accountability and the role of financial accounting 3 Learning objectives 2
Financial accounting defined 4 summary 43
Users’ demand for general purpose financial statements 4 Key terms 43
Sources of external financial reporting regulations 6 end-of-chapter exercises 43
The process of Australia adopting accounting standards issued review questions 44
by the International Accounting Standards Board 25 Challenging questions 44
Structure of the International Accounting Standards Board 34 references 46
International cultural differences and the harmonisation of accounting
standards 37
Accounting standards change across time 38
The use and role of audit reports 38
All this regulation—is it really necessary? 39
CHAPTER 2 The ConCePTuaL fraMeWorK for finanCiaL rePorTinG 48
Australia’s use of the IASB conceptual framework 49 Learning objectives 48
What is a conceptual framework? 49 summary 78
Benefits of a conceptual framework 50 Key terms 79
Current initiatives to develop a revised conceptual framework 50 end-of-chapter exercises 79
Structure of the conceptual framework 52 review questions 79
Building blocks of a conceptual framework 54 Challenging questions 80
Measurement principles 73 references 81
A critical review of conceptual frameworks 74
The conceptual framework as a normative theory of accounting 77
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PART 2 Theories of aCCounTinG 83
CHAPTER 3 Theories of finanCiaL aCCounTinG 84
Introduction to theories of financial accounting 85 Learning objectives 84
Why discuss theories in a book such as this? 85 summary 126
Definition of theory 86 Key terms 127
Positive Accounting Theory 87 end-of-chapter exercises 127
Accounting policy selection and disclosure 101 review questions 128
Accounting policy choice and ‘creative accounting’ 102 Challenging questions 131
Some criticisms of Positive Accounting Theory 103 further reading 134
Normative accounting theories 105 references 134
Systems-oriented theories to explain accounting practice 109
Theories that seek to explain why regulation is introduced 122
PART 3 aCCounTinG for asseTs 139
CHAPTER 4 an overvieW of aCCounTinG for asseTs 140
Introduction to accounting for assets 141 Learning objectives 140
Numbering of Australian Accounting Standards 141 summary 173
Definition of assets 142 Key terms 173
General classification of assets 149 end-of-chapter exercises 174
How to present a statement of financial position 150 review questions 174
Determination of future economic benefits 153 Challenging questions 176
Acquisition cost of assets 157 references 179
Accounting for property, plant and equipment—an introduction 158
Assets acquired at no cost 169
Possible changes in the requirements pertaining to financial
statement presentation 170
CHAPTER 5 DePreCiaTion of ProPerTY, PLanT anD eQuiPMenT 180
Introduction to accounting for depreciation of property, plant and equipment 181 Learning objectives 180
Depreciable amount (base) of an asset 182 summary 195
Determination of useful life 183 Key terms 196
Method of cost apportionment 184 end-of-chapter exercises 196
Depreciation of separate components 187 review questions 196
When to start depreciating an asset 188 Challenging questions 198
Revision of depreciation rate and depreciation method 188
Land and buildings 189
Modifying existing non-current assets 191
Disposition of a depreciable asset 191
Depreciation as a process of allocating the cost of an asset over its useful life:
further considerations 193
Disclosure requirements 194
ConTenTs in fuLL iX
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