Module Code and Title:   ACT202 Intermediate Financial Accounting

Programme:                          Bachelor of Commerce

Credit:                                    12

Module Tutor:                       Madhav Verma, Arindam Ghosh, Laxmi Kanth Dhakal, 

                                               Dilli Ram Sharma,Ritu Barna Adhikari, Tshering Pemo, Nawang Yangden 

Module Coordinator:            Arindam Ghosh

General objective: This module will look into different business entities of incorporated and unincorporated and their financial reporting characteristics. Students will examine the principles of financial accounting of unincorporated entities such as partnership and not-for-profit organizations. The module will also allow students to learn accounting treatments of unique transactions of consignment, joint ventures, branch and departmental arrangements.

Learning outcomes – On completion of the module, students will be able to:

1. Explain the features of unincorporated business entities and their financial reporting characteristics;
2. Prepare and present financial statements of unincorporated entities for external and internal users;
3. Identify and describe the nature of transactions in consignment, branch and departmental arrangements of business and account them as per the management policies; 
4. Discuss and account the effect of foreign currency exchange on the financial statements of the entity;
5. Examine the nature of lease transactions and account lease transactions in the books of lessor and lessee in accordance with the existing accounting practice. 
6. Present and disclose financial information on lease and currency exchange for external reporting purposes.
7. Analyse impacts of various financial transactions related to consignment, branch and departmental arrangements; foreign currency exchange and lease on financial and business decisions;  and
8. Use computing skills for recording and extracting accounting information for business decisions.

Teaching and Learning Approach:

Assessment Approach:

Each student will complete 2 written assignments of 4-6 problems each, each being worth 5%, on topics related with managerial decision making on different hypothetical practical problem on accounting.   The exact topics will be informed during the session.

4%       Content, identifying the problems areas

4%       Analysis of problems and suggesting solutions using appropriate accounting tools and techniques.

2%       Presentation, writing style- use of proper academic style

Students will be assigned one topic in a group of 4. They will collect secondary data on the given topic and analyse, conclude and make their recommendation in a paper of 1000 words (10%). This will be followed by a presentation (10%) of 15 minutes, with 5 min Q&A.

2%       Group mark: coordination of presentation and distribution of work among the group members.

2%       Collection of relevant data 

2%       Analysis and interpretation of data 

2%       Conclusion and recommendation

1%       Logical presentation, writing style 

1%       Bibliography and citation for correct citation as per APA format 

4%       Presentation Group mark: coordination and distribution of work among the group member.

6%       Presentation Individual mark will be assessed on following criteria: 

2%       Subject knowledge and ability to answer Q& A

2%       Smartness, body language, pronunciation, audibility

2%       Organization of presentation 

Students will be required to solve situation based business related problems in-class using accounting techniques and tools covered in class. There will be 2 problem solving tests each of 1hour duration. Each problem solving test is worth 7.5% and will be assessed on the following criteria.

5%       identifying the appropriate accounting technique to solve the problem

2.5%    correct solution of the problem

Each student will be assessed based on their active participation and preparedness in the class by contributing to the class discussions by answering questions, stating their opinions, and solving in class exercises during the sessions. This will be assessed based on following criteria

5%       contribution to the class discussion and listening to and responding logically to the viewpoints of others

Students will take a written exam of 2 hours duration covering topics up to the mid-point of the semester.

The module will have a semester-end exam for 2 hours covering the entire syllabus. The question will be divided into two parts – Part A (carrying 40% of the exam weightage) will be mostly of short answer including objective questions. Part-B (carrying almost 60% of the exam weightage) will be mostly of essay type or an extended response to the given question. This part of the question requires students to apply, analyse, and evaluate or construct knowledge and skills. Cases will also be used to test the levels of knowledge.

Pre-Requisites: ACT101 Financial Accounting

Subject matter:

1. Financial accounting and reporting in different entities 
   1. Differences between corporate and unincorporated entities: 
   2. Ownership structures and governance arrangements
   3. Objectives and organizational goals
   4. Internal and external reporting systems and information needs
   5. Objectives of financial management, sources of financing and reporting requirements 
   6. Regulatory enforcements including compliance with financial reporting and auditing standards
   7. Need for a corporate social responsibility and ethical practices   

1. Accounting for unincorporated entities
   1. Partnerships accounts 
      1. Nature and scope of partnership 
      2. Meaning and characteristics of partnership 
      3. Creation of partnership, partnership agreement and ‘model of partnership agreement’ in schedule I
      4. Limited liability partnership, partnership by holding out and other forms of partnerships 
      5. Regulatory environment for partnership in Bhutan and outside country
      6. Advantages and disadvantages of partnership in terms of management and finance 
      7. Partners’ capital accounts and current accounts 
      8. Interest’s on partner’s drawings
      9. Admission of a new partner –profit share adjustments 
      10. Goodwill and adjustment of good will
      11. Death or retirement of a partner
      12. Revaluation account  
      13. Dissolution of a partnership by piecemeal distribution 
      14. Insolvency of partners where Garner vs Murray precedent case is applied 
      15. Disposal of a partnership as a going concern 
      16. Opening the book of a newly formed acquiring company 
      17. Converting the books of  the partnership to those of a company  

1. Not-for-Profit Organization and public sector 
   1. Principal characteristics of not-for-profit organization   
   2. Governance and regulatory framework for not-for-profit organization 
   3. Performance measurement in not-for-profit organization 
   4. Financial management and reporting objectives 
   5. Accountability and transparency in Government and other public sector
   6. Introduction to public sector accounting standards and its scope
   7. Accounting and reporting in not-for-profit organization
   8. Principal financial statements:  
   9. Statement of Receipts and Payments 
   10. Bank accounts and bank reconciliation statements
   11. Statement of Income & Expenditure 
   12. Statement of financial position  

1. Accounting for special transactions 
   1. Consignment 
      1. Principal –agency relationship in consignment 
      2. Nature of consignment transactions 
      3. Accounting for consignment:
         1. Revenue recognition in consignment transaction 
         2. Valuation of stock on consignment 
         3. Normal and abnormal loss incurred on goods sent on consignment 
         4. Commissions (including del credere) and expenses paid to the consignee 
         5. Accounts settlement for goods sent on consignment 
   2. Joint Venture 
      1. Concept of joint venture 
      2. Principal characteristics of joint venture 
      3. Similarities and differences between Joint venture and partnership 
      4. Growing business of joint ventures in Bhutan 
      5. Advantages and disadvantages of joint venture 
      6. Management and leadership challenges 
      7. Accounting for joint venture:
      8. Using a separate set of books 
      9. Co-venturers maintaining own books 
      10. Reporting joint venture investment in the entity’s financial statements 

1. Branch Accounting and Departmental Accounting
   1. Branch Accounting 
      1. Meaning of branch accounting
      2. Need and business justification of branch operations 
      3. Costs and benefits of branch operation
      4. Variation of branch operations structure 
      5. Identified as cost center 
      6. Identified as cost and profit centers 
      7. Accounting for branch transactions and consolidation of accounts 
      8. Intra branch transactions and settlements 
      9. Application of IFRS 8 Segment reporting 
   2. Departmental Accounting
      1. Meaning of departmental accounting
      2. Difference between branch and departmental arrangements
      3. Accounting treatment –identified as cost and profit centers 
      4. Foreign branch operations 
      5. Basis of allocation of expenses 
      6. Inter departmental transfers and transfer pricing 

1. Accounting for sales tax and payroll 
   1. Accounting for sales tax
      1. Sales tax regulations in Bhutan 
      2. Sales tax vs Value Added Tax
      3. Accounting for sales tax and VAT collected from customers
      4. Accounting for VAT from purchases and expenses
      5. Calculation of sales tax and VAT
      6. Reporting sales tax and VAT on financial statements 

1. Accounting for payroll
   1. Gross and net salaries and wages 
   2. Accounting for salaries and wages
   3. Accounting for pay sheet recoveries 
   4. Reporting salaries and wages in financial statements 

1. Accounting for lease transactions   
   1. Concept of lease
   2. Lease as a potential source of financing 
   3. Advantages of lease 
   4. Types of lease – operating and financing leases
   5. Lease or buy decisions 
   6. Accounting for lease:
      1. Accounting for operating lease –from lessor’s and lessee’s perspectives
      2. Accounting for financing lease – from lessor’s and lessee’s perspectives
   7. Criticism of lease - off balance sheet financing 
   8. Reporting lease in the financial statements 

Reading List:

1. Essential Reading
   1. Augustine, B.&Barry, E. (2016). Financial Accounting (4^th Ed.). London, UK, Financial Times. 
   2. Elizabeth, A.G., Jana, S. R. & Alexander, J.S.(2016). Intermediate Accounting, London, New Delhi, India, Pearson Education.  

1. Additional Reading
   1. Anthony, R.N. & Reece, J.S. (2012). Accounting Principles, London, UK, Richard D. Irwin, Inc
   2. Anthony, R.N. (2011). Accounting Text and Cases (12^th Ed.). New Delhi, India, Tata McGraw-Hill Publishing Company Ltd.
   3. BPP Learning Media  (2016), AAT Prepare Final Accounts for Sole Traders and Partnerships: Study Text, BPP Learning Media

Date: July, 2017