This course [ACCT-GB.3330] is offered only once in spring on M-W mornings to MS in Accounting students.
This advanced course is part of the NYU Stern MS in Accounting program. It will teach you the following topics that are crucial for a graduate degree in accounting. Learning these topics will be intense but the knowledge gained will be highly useful in your career.
- Accounting for income taxes [ASC 740]
- Accounting for business combinations [ASC 805]
- Consolidations [ASC 810]
- Foreign operations [ASC 830]
- Derivatives [ASC 815]
Help and Office
- Me: firstname.lastname@example.org,
212-998-0021, Office: KMC 10-86.
- TA: Please check NYU Classes.
- Administrative assistant: Justin Pilozo email@example.com 212-998-4143, Office: Suite 10-185A, KMC 10th Floor, left-hand corne as you enter the department.
- I use my own materials. There is no required textbook. Because of copyright and contractual restrictions, these handouts
are distributed only on paper. Electronic copies are not available.
- If you are going to miss a class, ask a friend to pick up the handouts for you. It is difficult for me to carry these back and forth.
- There are no extra copies. If you lose your copy, you will have to make copies from your friends' handouts.
- Classes are not videotaped unless there is a special session.
- The assignments appear as tests on Almaris. I may update the deadlines as the course progresses. The deadlines shown at Almaris are the correct deadlines.
- Some assignments are short, others are long. Please manage your time.
- NO EXTENSIONS will be granted for any reason except medical or family emergencies. If you have religious or personal conflicts, submit the assignments early. The related materials are covered well in advance of the assignments. Please do not email me to request extensions unless you have a medical or family emergency.
- You can learn concepts from others, but you must work on the actual
assignment alone. You may be called upon in class to explain your answer to the assignments.
- All assignments are mandatory. After the first day of class, you can view the on-line assignments at http://www.almaris.com/assess/ using your official Stern email (no aliases) and most recent password emailed to you by Almaris. The Almaris password is different from the Stern password. To retrieve the password, use your Stern email id as it appears in the registrar's records.
- Assignments are marked “late” if you do not meet or exceed the passing score described below before the deadline. There is no additional penalty for lateness other than the low score.
- Assignments have a “passing score” of either 100% or less than 100%.
- I set the passing score at 100% if I believe that you should be able to ace the assignment. In reality, there is no passing grade. Whatever you get on your last attempt is your final score. That is, you are graded on accuracy but not the number of attempts. If you are allowed five attempts, and you use them, then your score on the fifth attempt is your final score for the assignment. There is a difference between “passing” and getting full credit. If you get 70/100 on your fifth attempt, you “pass” but you don't score a 100.
- On a few assignments, I set the passing score to be less than 100% if I believe that you may not be able to get every question right. Any score above that score is rounded up to 100%. For example, if the passing score is set at 90%, and you get 93%, then your score is rounded up to 100%. I do the rounding up in a separate spreadsheet. You will see only the raw score on line.
- Almaris is not affiliated with Stern in any way. It is offering these tests to Stern at no charge to Stern.
- Almaris staff is not authorized to extend deadlines under any circumstances. Only my TAs can do that. Almaris staff will reply to your emails only if they pertain to technical issues with the Almaris system. You should contact Stern IT for technical issues with your network.
Exams and Grading
- If you have a qualified disability and will require academic accommodation during this course, please contact me directly. I will arrange a separate room/time for you.
- Grades will be based upon the following factors:
- 25%: Attendance, professional conduct in class, and class participation as measured by being able to answer questions in class when I call on you in class.
- You will lose points for every missed class unless you have a medical emergency, family emergency, or a confirmed interview, or required work travel for Langone students. No other reasons will be accepted as valid reasons unless you have pre-cleared them with me. If you unfortunately do have a medical or family emergency, do not worry about the course. Take care of that emergency and email me later.
- If you are more than 10 minutes late, you will be marked absent..
- Please bring your name tags to each class.
- 25%: Almaris assignments described above.
- It is not necessary for you to get a full score on the Almaris assignments; any score above 80% is considered a passing score and will be rounded up to 100%.
- 50%: Final exam
- Your exam will constitute of one or more spreadsheets. Your score on each spreadsheet will be max(attempt1, attempt2 - 7, attempt3 - 14, attempt4 - 21, attempt5 - 28).
- In case you are unable to complete a spreadsheet or are unable to debug it, and want us to manually grade your spreadsheet, you must submit the spreadsheet online (NO EMAILS) at NYU Classes (look for File Exchange in the left hand menu bar) within FIVE MINUTES of the end of the exam. If you submit a spreadsheet for manual grading, your maximum score on that spreadsheet can only be 72/100. This is because someone else who takes five attempts to ace the spreadsheet will get only 72/100 because of the penalty for multiple attempts. Thus, if you submit the spreadsheet for manual grading, you would be considered to have used up your five attempts.
Important computer tips for the final
- DO NOT WORK ON A SPREADSHEET WITHIN A BROWSER. Save the spreadsheet to your desktop, work on it, and save it periodically. If you work on a spreadsheet in a browser and then navigate away from a page, ALL YOUR WORK WILL BE LOST.
- Restart your computer before the exam. This will close all other applications besides the browser and Excel and greatly minimize chances of computer problems.
- Bring an external mouse with a scroll wheel. It does speed up test taking. I have been using computer-based exams for seven years. I am always amazed at how much time students waste trying to use the track pad or the internal mouse.
- Maximize screen space by hiding the ribbon at the top of the Excel and menus at the top of your browsers. The more of the screen you see, the faster and more accurate you are.
- Bring a computer with as big a screen as possible.
- Organize your computer files and designate a directory where you will be saving your exam files.
- Don�t get an unfamiliar computer.
- There is no midterm. There will be no in-class graded quizzes.
- Please do not schedule any travel that conflicts with the exam. I will not move the exam for you unless you have a medical or family emergency.
- A detailed document listing the sequence of topics, related pages from the materials, related spreadsheets, and related assignments is provided in the course materials. The outline below is a brief summary.
1. Deferred taxes: An introduction
We will skip this part if you are already comfortable with it based on the coverage in prior classes.
Permanent versus temporary differences
- Book income versus taxable income
- Book basis versus tax basis
- Tax paid, tax bill, current tax expense, deferred tax expense, total tax expense
- Taxes payable, uncertain tax benefit liabilities, deferred tax liabilities
- Tax refunds receivable
2. Deferred taxes: Four key examples
Taxable and deductible temporary differences
- When book revenues precede taxable revenues: Book basis versus tax basis of receivables
- When book revenues follow taxable revenues: Book basis versus tax basis of deferred revenues
- When book expenses precede tax deductions: Book basis versus tax basis of accrued expenses
- When book expenses follow tax deductions: Book basis versus tax basis of deferred expenses
- When future enacted tax rates are different
3. Deferred taxes: Intermediate issues
Accumulated other comprehensive income
- Other comprehensive income arising from available-for-sale securities
- Introduction to intra-period tax allocations
Tax credit carryforwards and tax loss carry-backs and carryforwards
- R&D credit carryforwards
- AMT credit carryforwards
- NOL carryback
- NOL carryforwards
- More-likely than not criterion
- Positive evidence
- Negative evidence
- Trading securities
- Available-for-sale securities
When there is no consolidation
- Cost-method investments
- Equity-method investments
Introduction to consolidation
- Voting interest entities versus variable interest entities
- A peek at variable interest entities
5. Acquisitions: An example to illustrate the overall process
On the acquisition date
- Identify the acquirer
- Determine the acquisition date
- Compute consideration paid
- Measure the fair value of assets acquired and liabilities assumed: Step-ups
- Determine if push-down or top-side accounting applies
- Compute Deferred taxes
- Derive goodwill
Post acquisition date
- Increased depreciation and amortization
- Unwinding of deferred tax assets and liabilities
6. Acquisitions: Scope and Consideration paid
Scope of ASC 805
- Acquiring assets versus acquiring a business
- Definition of a business
- Joint ventures
- Transactions between entities under common control
- Veto rights
- Components of purchase consideration
- Cash paid
- Debt assumed
- Equity issued
- Contingent consideration: Equity-classified and liability-classified earnouts
- Replacement stock awards issued to employees
- Off-market contracts
- Items that are excluded from purchase consideration
- Preexisting relationships
- Share-based payments allocated to post-acquisition services
- Transaction costs
- Premium paid
- Understanding premium over book value versus premium over market value
- Understanding control premium
7. Acquisitions: Acquired assets and liabilities
- Trading, available-for-sale, and held-to-maturity securities: Difficulty of valuing Level III securities
- Receivables and allowances: Misleading days sales and allowance ratios after an acquisition
- Raw materials, work-in-process, and finished goods inventories: Misleading gross margin and days of inventory ratios after an acquisition
- PP&E: Distorted accumulated depreciation to gross PP&E ratios after an acquisition; distorted PP&E turnover after an acquisition
- Favorable leases and contracts
- Intangible assets
- Brands and trademarks
- Customer relationships
- Deferred tax assets are covered in the next section
Acquired pre-tax liabilities
- Accounts payable and accrued expenses: Misleading days payable after an acquisition
- Asset retirement obligations
- Deferred revenues: Understated future revenues, misleading days of deferred revenues
- Unfavorable leases and contracts
Deferred tax liabilities and assets
- Book basis versus tax basis in acquisitions and resulting deferred tax assets and liabilities
8. Acquisitions: Post-acquisition date accounting
- Finite life assets
- Indefinite life assets other than goodwill
- Finite life assets
- Indefinite life assets other than goodwill
9. Acquisitions: Non-controlling interest
When the parent retains control
- Profits and losses
- Other comprehensive income
- Increases or decreases in ownership stake while still maintaining control
When the parent acquires or relinquishes control
- Acquire control: Marking the existing investments to fair value and computing the fair value of remaining non-controlling interest
- Relinquish control: De-consolidation and marking the remaining investment to fair value
10. Foreign Operations
Overview of the process
- Identify the reporting entity and its reporting currency
- Identify distinct and separable operations within the reporting entity
- Determine the functional currency of each operation
- Remeasure amounts not in functional currency to functional currency
- Translate functional currency amounts to reporting currency
- Monetary assets
- Non-monetary assets
- How remeasurements affect financial ratios
- Cumulative translation adjustment
- How translations affect indirect cash flow adjustments
11. Intercompany transactions
Purchase and sale of inventory and long-lived assets
- Sale of inventory
- Sale of PP&E and intangibles
- Finite duration
- Indefinite duration
12. Introduction to derivatives
- What are derivatives? Why are they useful?
- Forward versus futures contracts
Commonly used derivatives
- Commodity derivatives
- Foreign currency derivatives
- Interest rate derivatives
13. Hedge accounting
The five possibilities
- Forward sale agreements
- Financial instruments at fair value but not accounted for as hedges
- Fair value hedge
- Cash flow hedge
- Hedge of net investment in a foreign operation