Financial Accounting: IFRS, 3rd Edition.

931 Pages·2015·21.276 MB·English

by  Kieso, Donald E., Kimmel, Paul D., Weygandt, Jerry J.

Jerry J. Weygandt PhD, CPA
University of Wisconsin—Madison
Madison, Wisconsin
Paul D. Kimmel PhD, CPA
University of Wisconsin—Milwaukee
Milwaukee, Wisconsin
Donald E. Kieso PhD, CPA
Northern Illinois University
DeKalb, Illinois
ACCOUNT CLASSIFICATION AND PRESENTATION
Normal
Account Title Classifi cation Financial Statement Balance
A
Accounts Payable Current Liability Statement of Financial Position Credit
Accounts Receivable Current Asset Statement of Financial Position Debit
Accumulated Depreciation— Plant Asset—Contra Statement of Financial Position Credit
Buildings
Accumulated Depreciation— Plant Asset—Contra Statement of Financial Position Credit
Equipment
Administrative Expenses Operating Expense Income Statement Debit
Advertising Expense Operating Expense Income Statement Debit
Allowance for Doubtful Accounts Current Asset—Contra Statement of Financial Position Credit
Amortization Expense Operating Expense Income Statement Debit
B
Bad Debt Expense Operating Expense Income Statement Debit
Bonds Payable Non-Current Liability Statement of Financial Position Credit
Buildings Plant Asset Statement of Financial Position Debit
C
Cash Current Asset Statement of Financial Position Debit
Copyrights Intangible Asset Statement of Financial Position Debit
Cost of Goods Sold Cost of Goods Sold Income Statement Debit
D
Debt Investments Current Asset/Long-Term Statement of Financial Position Debit
Investment
Depreciation Expense Operating Expense Income Statement Debit
Dividend Revenue Other Income and Expense Income Statement Credit
Dividends Temporary account closed Retained Earnings Debit
to Retained Earnings Statement
Dividends Payable Current Liability Statement of Financial Position Credit
E
Equipment Plant Asset Statement of Financial Position Debit
F
Freight-Out Operating Expense Income Statement Debit
G
Gain on Disposal of Plant Assets Other Income and Expense Income Statement Credit
Goodwill Intangible Asset Statement of Financial Position Debit
I
Income Summary Temporary account closed Not Applicable (1)
to Retained Earnings
Income Tax Expense Income Tax Expense Income Statement Debit
Income Taxes Payable Current Liability Statement of Financial Position Credit
Insurance Expense Operating Expense Income Statement Debit
Interest Expense Other Income and Expense Income Statement Debit
Interest Payable Current Liability Statement of Financial Position Credit
Interest Receivable Current Asset Statement of Financial Position Debit
Interest Revenue Other Income and Expense Income Statement Credit
Inventory Current Asset Statement of Financial Position (2) Debit
Normal
Account Title Classifi cation Financial Statement Balance
L
Land Plant Asset Statement of Financial Position Debit
Loss on Disposal of Plant Assets Other Income and Expense Income Statement Debit
M
Maintenance and Repairs Expense Operating Expense Income Statement Debit
Mortgage Payable Non-Current Liability Statement of Financial Position Credit
N
Notes Payable Current Liability/ Statement of Financial Position Credit
Non-Current Liability
P
Patents Intangible Asset Statement of Financial Position Debit
Prepaid Insurance Current Asset Statement of Financial Position Debit
R
Rent Expense Operating Expense Income Statement Debit
Research and Development Expense Operating Expense Income Statement Debit
Retained Earnings Equity Statement of Financial Position Credit
and Retained Earnings Statement
S
Salaries and Wages Expense Operating Expense Income Statement Debit
Salaries and Wages Payable Current Liability Statement of Financial Position Credit
Sales Discounts Revenue—Contra Income Statement Debit
Sales Returns and Allowances Revenue—Contra Income Statement Debit
Sales Revenue Revenue Income Statement Credit
Selling Expenses Operating Expense Income Statement Debit
Service Revenue Revenue Income Statement Credit
Share Capital—Ordinary Equity Statement of Financial Position Credit
Share Capital—Preference Equity Statement of Financial Position Credit
Share Investments Current Asset/Long-Term Statement of Financial Position Debit
Investment
Share Premium—Ordinary Equity Statement of Financial Position Credit
Share Premium—Preference Equity Statement of Financial Position Credit
Supplies Current Asset Statement of Financial Position Debit
Supplies Expense Operating Expense Income Statement Debit
T
Treasury Shares Equity—Contra Statement of Financial Position Debit
U
Unearned Service Revenue Current Liability Statement of Financial Position Credit
Utilities Expense Operating Expense Income Statement Debit
(1) The normal balance for Income Summary will be credit when there is a net income, debit when there is a net loss. The
Income Summary account does not appear on any fi nancial statement.
(2) If a periodic system is used, Inventory also appears on the income statement in the calculation of cost of goods sold.
The following is a sample chart of accounts. It does not represent a comprehensive chart of all the accounts used in
this textbook but rather those accounts that are commonly used. This sample chart of accounts is for a company that
generates both service revenue as well as sales revenue. It uses the perpetual approach to inventory. If a periodic
system was used, the following temporary accounts would be needed to record inventory purchases: Purchases,
Freight-In, Purchase Returns and Allowances, and Purchase Discounts.
CHART OF ACCOUNTS
Assets Liabilities Equity Revenues Expenses
Cash Notes Payable Share Capital— Service Revenue Administrative
Preference Expenses
Accounts Accounts Payable Sales Revenue
Receivable Share Capital— Amortization
Unearned Service Ordinary Sales Discounts Expense
Allowance for Revenue
Doubtful Share Premium— Sales Returns and Bad Debt Expense
Accounts Salaries and Preference Allowances
Wages Payable Cost of Goods Sold
Interest Share Premium— Interest Revenue
Receivable Interest Payable Ordinary Depreciation
Gain on Disposal Expense
Inventory Dividends Payable Retained Earnings of Plant Assets
Freight-Out
Supplies Income Taxes Treasury Shares
Payable Income Tax
Prepaid Insurance Dividends Expense
Bonds Payable
Land Income Summary Insurance Expense
Mortgage Payable
Equipment Interest Expense
Accumulated Loss on Disposal of
Depreciation— Plant Assets
Equipment
Maintenance and
Buildings Repairs Expense
Accumulated Rent Expense
Depreciation—
Buildings Salaries and Wages
Expense
Copyrights
Selling Expenses
Goodwill
Supplies Expense
Patents
Utilities Expense
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Library of Congress Cataloging-in-Publication Data
Weygandt, Jerry J.
Financial accounting : IFRS / Jerry J. Weygandt, Paul D. Kimmel, Donald E.
Kieso. — 3rd edition.
pages cm
Includes index.
ISBN 978-1-118-97808-5 (cloth)
1. Accounting. 2. Accounting—Standards. 3. International business
enterprises—Accounting—Standards I. Kimmel, Paul D. II. Kieso, Donald E.
III. Title.
HF5635.W52423 2015
657.02’18—dc23
2015022964
ISBN-13 978-1-118-97808-5
The inside back cover will contain printing identifi cation and country of origin if omitted from this page. In addition, if
the ISBN on the back cover differs from the ISBN on this page, the one on the back cover is correct.
Printed in Asia
10 9 8 7 6 5 4 3 2 1
Brief Contents
1 Accounting in Action 2
2 The Recording Process 52
3 Adjusting the Accounts 100
4 Completing the Accounting Cycle 160
5 Accounting for Merchandising Operations 218
6 Inventories 276
7 Fraud, Internal Control, and Cash 328
8 Accounting for Receivables 382
9 P lant Assets, Natural Resources,
and Intangible Assets 426
10 Liabilities 480
11 C orporations: Organization, Share Transactions,
Dividends, and Retained Earnings 536
12 Investments 598
13 Statement of Cash Flows 644
14 Financial Statement Analysis 710
APPENDICES
A Specimen Financial Statements: TSMC, Ltd. A-1
B Specimen Financial Statements: Nestlé SA B-1
C Specimen Financial Statements: Petra Foods Limited C-1
D Specimen Financial Statements: Apple Inc. D-1
E Time Value of Money E-1
F Accounting for Partnerships F-1
*G Subsidiary Ledgers and Special Journals G-1
*H Other Significant Liabilities H-1
* I Payroll Accounting I-1
*Available at the book's companion website, www.wiley.com/college/
weygandt.
iii
From the Authors
Dear Student,
Why This Course? Remember your biology course in high school? Did you have one
of those “invisible man” models (or maybe something more high-tech than that) that
gave you the opportunity to look “inside” the human body? This accounting course
offers something similar. To understand a business, you have to understand the financial
insides of a business organization. An accounting course will help you understand
the essential financial components of businesses. Whether you are looking at a large
multinational company like TSMC or Apple or a single-owner software consulting business
or coffee shop, knowing the fundamentals of accounting will help you understand
what is happening. As an employee, a manager, an investor, a business owner, or a
director of your own personal finances—any of
which roles you will have at some point in your
“Whether you are looking at a large
life—you will make better decisions for having
multinational company like TSMC
taken this course.
or Apple or a single-owner software
Why This Book? Thousands of students have consulting business or coffee shop,
used this textbook. Your instructor has chosen it knowing the fundamentals of
for you because of its trusted reputation. The accounting will help you understand
authors have worked hard to keep the book fresh, what is happening.”
timely, and accurate.
How to Succeed? We've asked many students and many instructors whether there is
a secret for success in this course. The nearly unanimous answer turns out to be not
much of a secret: “Do the homework.” This is one course where doing is learning. The
more time you spend on the homework assignments—using the various tools that this
textbook provides—the more likely you are to learn the essential concepts, techniques,
and methods of accounting. Besides the textbook itself, WileyPLUS and the book's
companion website also offers various support resources.
Good luck in this course. We hope you enjoy the experience and that you put to good
use throughout a lifetime of success the knowledge you obtain in this course. We are
sure you will not be disappointed.
Jerry J. Weygandt
Paul D. Kimmel
Donald E. Kieso
iv
Author Commitment
Jerry Weygandt Paul Kimmel Don Kieso
JERRY J. WEYGANDT, PhD, CPA, is Arthur PAUL D. KIMMEL, PhD, CPA, received his DONALD E. KIESO, PhD, CPA, received his
Andersen Alumni Emeritus Professor of bachelor's degree from the University of bachelor's degree from Aurora University
Accounting at the University of Wisconsin— Minnesota and his doctorate in accounting and his doctorate in accounting from the
Madison. He holds a Ph.D. in accounting from from the University of Wisconsin. He is an University of Illinois. He has served as chairman
the University of Illinois. Articles by Professor Associate Professor at the University of of the Department of Accountancy and is
Weygandt have appeared in the Accounting Wisconsin—Milwaukee, and has public currently the KPMG Emeritus Professor of
Review, Journal of Accounting Research, accounting experience with Deloitte & Touche Accountancy at Northern Illinois University.
Accounting Horizons, Journal of Accountancy, (Minneapolis). He was the recipient of the He has public accounting experience with
and other academic and professional journals. UWM School of Business Advisory Council Price Waterhouse & Co. (San Francisco
These articles have examined such fi nancial Teaching Award, the Reggie Taite Excellence and Chicago) and Arthur Andersen & Co.
reporting issues as accounting for price-level in Teaching Award and a three-time winner of (Chicago) and research experience with the
adjustments, pensions, convertible securities, the Outstanding Teaching Assistant Award Research Division of the American Institute
stock option contracts, and interim reports. at the University of Wisconsin. He is also a of Certifi ed Public Accountants (New York).
Professor Weygandt is author of other ac- recipient of the Elijah Watts Sells Award for He has done post doctorate work as a Visiting
counting and fi nancial reporting books and Honorary Distinction for his results on the Scholar at the University of California at
is a member of the American Accounting CPA exam. He is a member of the American Berkeley and is a recipient of NIU's Teaching
Association, the American Institute of Certifi ed Accounting Association and the Institute of Excellence Award and four Golden Apple
Public Accountants, and the Wisconsin Society Management Accountants and has published Teaching Awards. Professor Kieso is the
of Certifi ed Public Accountants. He has served articles in Accounting Review, Accounting author of other accounting and business
on numerous committees of the American Horizons, Advances in Management Accounting, books and is a member of the American
Accounting Association and as a member of Managerial Finance, Issues in Accounting Accounting Association, the American
the editorial board of the Accounting Review; Education, Journal of Accounting Education, Institute of Certifi ed Public Accountants, and
he also has served as President and Secretary- as well as other journals. His research interests the Illinois CPA Society. He has served as a
Treasurer of the American Accounting Associa- include accounting for fi nancial instruments member of the Board of Directors of the
tion. In addition, he has been actively involved and innovation in accounting education. He Illinois CPA Society, then AACSB's Accounting
with the American Institute of Certifi ed Public has published papers and given numerous Accreditation Committees, the State of
Accountants and has been a member of the talks on incorporating critical thinking into Illinois Comptroller's Commission, as Secretary-
Accounting Standards Executive Committee accounting education, and helped prepare a Treasurer of the Federation of Schools of
(AcSEC) of that organization. He has served on catalog of critical thinking resources for the Accountancy, and as Secretary-Treasurer of
the FASB task force that examined the report- Federated Schools of Accountancy. the American Accounting Association. Professor
ing issues related to accounting for income Kieso is currently serving on the Board of
taxes and served as a trustee of the Financial Trustees and Executive Committee of Aurora
Accounting Foundation. Professor Weygandt University, as a member of the Board of
has received the Chancellor's Award for Excel- Directors of Kishwaukee Community Hospital,
lence in Teaching and the Beta Gamma Sigma and as Treasurer and Director of Valley West
Dean's Teaching Award. He is on the board of Community Hospital. From 1989 to 1993 he
directors of M & I Bank of Southern Wisconsin. served as a charter member of the national
He is the recipient of the Wisconsin Institute of Accounting Education Change Commission.
CPA's Outstanding Educator's Award and the He is the recipient of the Outstanding
Lifetime Achievement Award. In 2001 he re- Accounting Educator Award from the Illinois
ceived the American Accounting Association's CPA Society, the FSA’s Joseph A. Silvoso Award
Outstanding Educator Award. of Merit, the NIU Foundation’s Humanitarian
Award for Service to Higher Education, a
Distinguished Service Award from the Illinois
CPA Society, and in 2003 an honorary
doctorate from Aurora University.
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