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FASB Accounting Standards Codification: StudentAuthored Research Exercises

AUTHOR BIOGRAPHIES Elsie Ameen is an associate professor at Sam Houston State University. Her primary teaching area is financial accounting. She has published in The Journal of Accounting and Finance Research, Journal of Education for Business, Advances in Accounting Education: Teaching and Curriculum Innovations, Accounting Education, Journal of Business Ethics, Issues in Accounting Education, Journal of Business, Finance & Accounting and Auditing: A Journal of Practice & Theory. Contact information: [email protected] or 9362941263. Alice Ketchand is a professor at Sam Houston State University. Her primary teaching areas are financial and governmental accounting. She has published in Accounting, Auditing & Accountability Journal, Behavioral Research in Accounting, Journal of Business Ethics, Journal of Accountancy, Auditing: a Journal of Practice and Theory, Journal of Accounting and Finance Research, Research on Accounting Ethics, and Journal of Managerial Issues. Contact information: [email protected] or 9362941284. ABSTRACT Research skills are essential for today's accounting graduates to be successful in the profession as well as to pass the CPA exam. Based on the maxim that the best way to learn something is to teach it, students in a financial accounting graduate class demonstrated their mastery of GAAP research skills by creating research assignments using the FASB Accounting Standards Codification. LEARNING OBJECTIVES The learning objectives are: 1. to apply research skills using the FASB Accounting Standards Codification 2. to gain insight into accounting issues arising in realworld business circumstances 3. to formulate research questions to determine proper GAAP treatment for identified accounting issues CORE COMPETENCIES ADDRESSED AICPA Core Competencies specifically addressed: Functional Competencies Research: Students employ relevant research skills both in identifying an accountingrelated scenario from the business environment and in accessing standards and rules (GAAP) pertinent to addressing the accounting issues. Decision Modeling: Students must objectively evaluate the facts in the business situation and identify the accounting issues to be addressed. Then they develop a research strategy to determine the proper accounting measurement and reporting. 1

FASB Accounting Standards Codification: StudentAuthored Research Exercises

DETAILED ACTIVITY DESCRIPTION Research skills are essential for today's accounting graduates to be successful in the profession as well as to pass the CPA exam. Based on the maxim that the best way to learn something is to teach it, students in a financial accounting graduate class demonstrated their mastery of GAAP research skills by creating research assignments using the FASB Accounting Standards Codification. The students had learned to navigate the Codification to research financial accounting issues using structured assignments such as the one below. Accounting for Asset Retirement Obligations The 2006 annual report of U.S. Cellular contained the following footnote: "U.S. Cellular is subject to asset retirement obligations associated primarily with its cell sites, retail sites and office locations. Asset retirement obligations generally include obligations to remediate leased land on which U.S. Cellular's cell sites and switching offices are located. Also, U.S. Cellular is generally required to return leased retail store premises and office space to their preexisting conditions. The asset retirement obligation is included in Deferred Liabilities and Credits in the Consolidated Balance Sheets." 1. Which topic (give the number and name) in the FASB ASC covers asset retirement obligations? 2. In which area is this found? 3. Which Statement of Financial Accounting Standards covers asset retirement obligations? 4. This guidance covers "legal obligations associated with the retirement of tangible long lived assets...." In this context, what is the definition of legal obligation? 5. When and at what amount should an asset retirement obligation initially be reported? 6. How is this amount determined? 7. What is the offsetting entry (the debit)? 8. How is the cost of the retirement obligation treated over the life of the asset? 9. What is accretion expense? 10. Where should accretion expense be reported in the income statement? 11. What should be disclosed related to asset retirement obligations? 12. How should amounts paid to settle an asset retirement obligation be classified in the Statement of Cash Flows? The assignment was part of the final exam for the course during the fall 2008 semester. As a continuation of learning the research skills and techniques, students composed exercises based on realworld situations. The students chose the scenarios, identified the relevant accounting issues and then structured an exercise relating to the proper GAAP treatment of the issue using the Codification. The students also provided the solutions to the exercises. 2

FASB Accounting Standards Codification: StudentAuthored Research Exercises

There were 30 students in the class, who wrote exercises covering 18 different topics. The table below indicates the topics and the number of students who chose each topic. Topics Number of Exercises 1 Inventory 3 2 NotforProfit Entities 3 3 Derivatives and Hedge Accounting 2 4 Fair Value 2 5 Pensions 2 6 Airline Industry 2 7 Contingencies 2 8 Oil and Gas Industry 2 9 Foreign Currency 2 10 Income Taxes 2 11 Qualified Special Purpose Entities 1 12 Cash and Cash Equivalents 1 13 Interim Reporting 1 14 Goodwill and Other Intangibles 1 15 Revenue Recognition 1 16 Interest Capitalization 1 17 Leases 1 18 Transfers and Servicing of Financial Assets 1

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FASB Accounting Standards Codification: StudentAuthored Research Exercises

The Assignment: FASB Accounting Standards Codification This assignment is part of your final exam and is worth 50 points. In addition, you will have an inclass exam related to the FASB ASC worth 50 points. 1. Choose a topic. 2. Email your topic area to me. I want to make sure we do not have too many people using the same topic. I will let you know whether your topic area is acceptable. 3. Find an article or a footnote in an annual report related to this topic. Use this as your basis for the exercise. 4. Write an exercise with 10 questions. Include 35 questions related to navigation (where to find information in the Codification). The remaining questions should be content related such as recognition, initial measurement, subsequent measurement, disclosures or derecognition. 5. Include the suggested solution.

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