Planning view

Course topic outline

This planning view maps each learning objective to the concepts, source lessons, and teaching depth it requires.

Planning view, not a student page

7 units, 24 teaching meetings, 93 objectives, and 279 distinct accounting concepts. The requirement map is not an inventory of the corpus. Each concept appears under the objective that teaches it. The tables mark the 51 concepts that still need text.

At a glance

Unit	Meetings	Objectives	Concepts	Covered	To write	Assessed on
1. Reporting system and the cycle	Tue 9/1 to Tue 9/15	7	66	66	0	Exam 1, and the company project
2. Income statement and revenue	Thu 9/17 to Thu 9/24	10	32	32	0	Exam 1, and the company project
3. Financial position and obligations	Thu 10/1 to Tue 10/6	7	32	31	1	Units 3 and 4 mini-exam, and the company project
4. Cash flows and receivables	Thu 10/8 to Tue 10/20	10	50	46	4	Units 3 and 4 mini-exam, and the company project
5. Inventory	Thu 10/29 to Tue 11/10	8	41	37	4	The company project
6. Property, plant, and equipment	Thu 11/12 to Tue 11/24	10	41	29	12	The company project
7. Intangible assets	Tue 12/1 to Thu 12/3	6	25	24	1	The company project

Unit 1 · 66 of 66 concepts covered · 5 meetings · Tue 9/1 to Tue 9/15

The reporting system and the accounting cycle

How do transactions become financial statements, and who sets the rules for what those statements report?

1.1 (analyze) — Follow a transaction from the event through the journal and the ledger to the trial balance, and explain what equal trial balance totals test and which recording errors can remain hidden.

20 concepts. Existing material covers all of them.

Teach to understand	Definition
Asset	A present right of an entity to an economic benefit; whether that right is recognized and how it is measured depend on the applicable reporting requirements.
Liability	A present obligation of an entity to transfer an economic benefit; whether that obligation is recognized and how it is measured depend on the applicable reporting requirements.
Equity	The residual interest in an entity's assets after deducting its liabilities, as represented under the applicable financial-reporting model.
Revenue	An inflow or other enhancement of assets, a settlement of liabilities, or a combination of both that results from delivering or producing goods, rendering services, or carrying out other activities.
Expense	An outflow or other use of assets, an incurrence of liabilities, or a combination of both that results from delivering or producing goods, rendering services, or carrying out other activities.
Financial statement element	A broad class of economic phenomena represented in general-purpose financial statements, such as assets, liabilities, equity, revenues, and expenses.
Accounting cycle	The recurring sequence through which an entity identifies and analyzes events, records and posts entries, checks and adjusts balances, prepares financial statements, and closes or carries accounts into the next period.
T-account	A simplified two-sided visual representation of one account that displays debit entries on the left, credit entries on the right, and the resulting balance under the account's normal-balance convention.

Teach to apply	Definition
Account	A structured record that accumulates increases, decreases, and a balance for a particular kind of asset, liability, equity component, revenue, expense, or other reporting item.
Accounting equation	The relationship Assets = Liabilities + Equity, expressing that an entity's recognized resources are financed by creditor claims and the residual claims represented in equity.
Accounting transaction	An economic event or condition that meets the entity's recording criteria and changes one or more recognized elements or the accounts representing them.
Credit	An amount entered on the right side of an account or journal entry; it increases credit-normal accounts and decreases debit-normal accounts.
Debit	An amount entered on the left side of an account or journal entry; it increases debit-normal accounts and decreases credit-normal accounts.
Double-entry accounting	A recording system in which each transaction affects at least two accounts and the total amount recorded as debits equals the total amount recorded as credits.
General ledger	The organized collection of an entity's accounts and their posted activity and balances, maintained as the central account-level record for financial reporting.
Journal entry	A dated record of a transaction or adjustment that identifies the affected accounts and amounts, assigns each amount to debit or credit, and may include an explanation or source reference.
Normal balance	The debit or credit side on which increases in an account class are normally recorded and on which a positive balance for that class is ordinarily shown.
Posting	The process of transferring each journal-entry line to the corresponding ledger account so that account activity and balances can be accumulated.

Teach to analyze	Definition
Recording error	A mistake made while recording or posting a transaction, which either leaves total debits equal to total credits or does not, and which a trial balance can therefore hide or expose.
Trial balance	A listing of ledger accounts and their debit or credit balances at a specified date, used to verify that total debit balances equal total credit balances and to support later reporting steps.

Source material: Why the accounting equation always balances, Why equity changed, Which date belongs in the journal?, How debits and credits change account balances, How to build a journal entry, How an entry reaches the trial balance

1.2 (analyze) — Sort a period-end economic event into its adjustment type, compute the adjustment, and state how omitting the entry affects net income, assets, liabilities, and equity.

13 concepts. Existing material covers all of them.

Teach to understand	Definition
Carrying amount	The amount at which an asset or liability is recognized in the statement of financial position after applicable accumulated allocations, allowances, or other measurement adjustments at the reporting date.
Accumulated depreciation	A credit-normal contra-asset that accumulates depreciation recognized on a related depreciable asset through the reporting date and is deducted from the related gross carrying amount in deriving carrying amount.
Cash basis accounting	A basis of accounting that records revenue when cash is received and expense when cash is paid, without regard to the period in which the underlying performance or benefit occurred.

Teach to apply	Definition
Accrued expense	An expense recognized for resources or services consumed or obligations incurred in the current period before the related cash payment, with a corresponding liability for the unsettled amount.
Accrued revenue	Revenue recognized for performance occurring in the current period before the related cash is collected and, in a basic fact pattern, before the customer is billed, with a corresponding asset representing the claim.
Adjusting entry	A journal entry recorded as part of period-end reporting to bring account balances up to date for economic activity, estimates, or classifications not fully reflected in the unadjusted ledger.
Contra account	An account linked to a related account or class that ordinarily carries the opposite normal balance and is used to present or analyze an offset without erasing the related gross amount and its separate history.
Depreciation	The systematic allocation of a tangible long-lived asset's depreciable amount to expense over the periods expected to receive its service potential under the selected method and estimates.
Prepaid expense	An asset arising when an entity pays before receiving or consuming the related future economic benefit, with the asset reduced and expense recognized as that benefit is consumed under the applicable accounting treatment.
Unearned revenue	A liability arising in a basic cash-first arrangement when an entity receives consideration before satisfying the related performance or refund obligation, with the liability reduced and revenue recognized as qualifying performance occurs.

Teach to analyze	Definition
Accounting estimate	A reported or input amount determined using current information, assumptions, and judgment when the relevant economic characteristic cannot be measured with complete precision at the reporting date.
Accrual-basis accounting	An accounting basis that recognizes the effects of transactions and other events in the periods in which the relevant economic activity occurs, even when the related cash receipt or payment occurs in another period.
Deferral	A timing pattern in which cash is paid or received before the related resource consumption or performance is recognized, so an asset or liability carries the unrecognized portion into a later period.

Source material: Why an equal trial balance still needs adjustments, Cash first: prepayments and customer advances, Straight-line depreciation refresher

1.3 (apply) — Build the financial statements and the closing entries from an adjusted trial balance, and explain how net income and ending equity connect the statements and why the repeated amounts must agree.

12 concepts. Existing material covers all of them.

Teach to understand	Definition
Post closing trial balance	A trial balance drawn after the closing entries have been posted, containing only permanent accounts and serving as the opening ledger of the next period.

Teach to apply	Definition
Adjusted trial balance	A trial balance drawn after the period's adjusting entries have been posted, listing the account balances from which the financial statements are prepared.
Balance sheet	A financial statement that presents an entity's recognized assets, liabilities, and equity at a specified date under the applicable reporting framework.
Closing entry	A journal entry made after period results are finalized to transfer temporary account balances into the appropriate continuing equity account or closing account and reset those temporary accounts for the next reporting period.
Income statement	A financial statement that presents recognized revenues, gains, expenses, losses, and resulting performance subtotals for a specified reporting period.
Net income	The residual measure of a reporting period's recognized revenues and gains after recognized expenses and losses under the applicable reporting basis, before considering owner investments and distributions outside performance.
Permanent account	An account whose ending balance carries into the next reporting period rather than being reset through the ordinary closing of period activity.
Statement of changes in equity	A financial statement that reconciles each presented equity component from its beginning balance through performance, owner transactions, and other recognized changes to its ending balance for a specified period.
Temporary account	An account used to accumulate a reporting period's revenue, expense, gain, loss, or owner-distribution activity and then reset for the next period through the entity's closing process.

Teach to analyze	Definition
Financial statement articulation	The coherent linkage by which recognized period performance and owner or other equity changes reconcile beginning to ending equity, and ending equity appears consistently within a balanced ending financial position.
Financial statements	Structured reports that present an entity's recognized financial position, performance, cash flows, and changes in equity for specified dates or periods, together with required notes and contextual information under the applicable reporting framework.
Retained earnings	A continuing equity account that accumulates an entity's recognized earnings and losses, reduced by dividends or other distributions charged to the account, subject to the entity's legal form and reporting requirements.

Source material: Close the period without deleting its history, Trace net income into ending equity, Find why a set of statements does not agree

1.4a (understand) — Distinguish US GAAP from other standards by source and authority.

3 concepts. Existing material covers all of them.

Teach to understand	Definition
Financial reporting institution	An organization or legally constituted body that creates, interprets, enforces, audits, oversees, distributes, or uses rules and information in a financial-reporting system.

Teach to apply	Definition
FASB Accounting Standards Codification	FASB's topical research structure for authoritative nongovernmental US GAAP, organized by Topic, Subtopic, Section, and paragraph and updated through Accounting Standards Updates.

Teach to analyze	Definition
Authoritative accounting guidance	Financial-reporting requirements and interpretive material that the applicable legal and standard-setting system recognizes as governing an entity's accounting conclusion for a stated jurisdiction and period.

Source material: Who has authority, and where do you research it?

1.4b (analyze) — Determine the authoritative US GAAP that governs a reporting question.

3 concepts. Existing material covers all of them.

Teach to understand	Definition
Professional judgment	A disciplined conclusion reached by applying relevant knowledge, authoritative criteria, evidence, ethical responsibilities, and explicit assumptions to a decision whose answer is not supplied by mechanical calculation alone.

Teach to apply	Definition
FASB Accounting Standards Codification	FASB's topical research structure for authoritative nongovernmental US GAAP, organized by Topic, Subtopic, Section, and paragraph and updated through Accounting Standards Updates.

Teach to analyze	Definition
Authoritative accounting guidance	Financial-reporting requirements and interpretive material that the applicable legal and standard-setting system recognizes as governing an entity's accounting conclusion for a stated jurisdiction and period.

Source material: Who has authority, and where do you research it?

1.4c (evaluate) — Evaluate financial information for decision usefulness.

12 concepts. Existing material covers all of them.

Teach to understand	Definition
Understandability	The quality of classifying, characterizing, and presenting financial information clearly and concisely for users who have reasonable business and economic knowledge and review the information diligently.

Teach to analyze	Definition
Comparability	The quality that enables users to identify meaningful similarities and differences among financial phenomena across entities, periods, or reporting choices after relevant bases and contexts are aligned.
Cost constraint on financial reporting	The pervasive constraint that the expected benefits of financial information should justify the direct and indirect costs of preparing, verifying, disseminating, analyzing, and using it.
Faithful representation	The quality of depicting the economic phenomenon selected for reporting as completely, neutrally, and free from material error as the applicable process and uncertainty allow.
General-purpose financial reporting	Financial information prepared for a broad class of external resource providers who cannot require a reporting entity to produce a custom report for each decision.
Materiality	An entity-specific aspect of relevance concerning whether an omission, misstatement, or obscuring presentation could reasonably influence decisions made by users of that entity's general-purpose financial reports.
Qualitative characteristic of useful financial information	A conceptual property used to evaluate whether financial information can serve its reporting purpose, including fundamental and enhancing qualities whose effects must be considered together.
Relevance	The quality of financial information that makes it capable of affecting a resource-allocation decision through predictive value, confirmatory value, or both.
Reporting entity	The circumscribed area of economic activities whose financial information is represented by a particular set of general-purpose financial reports.
Timeliness	The quality of making financial information available early enough to retain the capacity to affect a user's decision, given the reporting purpose and the evidence reasonably obtainable by the reporting date.
Verifiability	The quality that allows knowledgeable and independent observers to reach reasonable agreement that a depiction or the method used to produce it is supported, whether verification is direct or indirect.

Source material: What and whom is the report for?, When is information useful enough to report?, How does the FASB use the Conceptual Framework?

1.5 (analyze) — Interpret reported financial information using relevant context from the company's public filings.

6 concepts. Existing material covers all of them.

Teach to understand	Definition
Financial statement disclosure	Information communicated with the financial statements to explain recognized amounts, unrecognized phenomena, policies, assumptions, uncertainties, concentrations, changes, and other matters required for users to understand the reporting entity's financial information.
Monetary unit assumption	An introductory accounting convention that expresses recognized amounts in a stated monetary unit while requiring the entity, period, unit, and measurement basis to remain visible.
Reporting entity	The circumscribed area of economic activities whose financial information is represented by a particular set of general-purpose financial reports.
Time-period assumption	An introductory reporting convention that divides an entity's continuing activities into stated reporting periods so that period performance and date-specific financial position can be communicated.

Teach to analyze	Definition
Accounting policy disclosure	A note explanation of the recognition, measurement, presentation, consolidation, or other accounting principles and methods necessary for a reader to understand the entity's financial statements.
Public filing navigation	A reproducible method for locating, identifying, and cross-checking financial statements, notes, schedules, management discussion, controls information, exhibits, and machine-readable facts within an official filing for a stated registrant and period.

Source material:

Unit 2 · 32 of 32 concepts covered · 3 meetings · Thu 9/17 to Thu 9/24

The income statement and revenue recognition

Revenue sits at the center of more accounting frauds than any other line. Why is it hard to get right even when nobody is cheating?

2.1a (apply) — Prepare a multiple-step income statement.

8 concepts. Existing material covers all of them.

Teach to apply	Definition
Classified financial statement	A financial statement that organizes recognized items into decision-relevant categories, line items, and subtotals under applicable presentation criteria while preserving the statement's totals and articulation.
Gross profit	Net sales less the cost of goods sold, the first subtotal on a multiple-step income statement and the amount available to cover operating and other costs.
Income statement	A financial statement that presents recognized revenues, gains, expenses, losses, and resulting performance subtotals for a specified reporting period.
Multiple step income statement	An income statement format that reports intermediate subtotals, separating the cost of goods sold and operating expenses from peripheral items so that gross profit and operating income are shown.
Operating income	Gross profit less operating expenses, the subtotal that reports the result of an entity's central and continuing activities before peripheral items and tax.

Teach to analyze	Definition
Income from continuing operations	The income-statement component for the reporting entity's operations and other recognized items that remain after separating qualifying discontinued operations, determined for the stated period under applicable US GAAP.
Income statement classification	The organization of recognized revenues, expenses, gains, and losses into required components, captions, and subtotals that communicate performance for a stated entity and period.
Net income	The residual measure of a reporting period's recognized revenues and gains after recognized expenses and losses under the applicable reporting basis, before considering owner investments and distributions outside performance.

Source material: Classify amounts before comparing statements

2.1b (analyze) — Analyze operating performance using income-statement subtotals.

7 concepts. Existing material covers all of them.

Teach to apply	Definition
Gross profit	Net sales less the cost of goods sold, the first subtotal on a multiple-step income statement and the amount available to cover operating and other costs.
Operating income	Gross profit less operating expenses, the subtotal that reports the result of an entity's central and continuing activities before peripheral items and tax.

Teach to analyze	Definition
Comprehensive income	The change in equity of a business entity during a period from transactions and other events and circumstances from nonowner sources, presented as net income plus other comprehensive income under applicable US GAAP.
Income from continuing operations	The income-statement component for the reporting entity's operations and other recognized items that remain after separating qualifying discontinued operations, determined for the stated period under applicable US GAAP.
Income statement limitation	A constraint on what a reported income statement can show, arising from items omitted because they are not recognized, from measurement that depends on estimates, and from the effect of policy choices on comparability.
Net income	The residual measure of a reporting period's recognized revenues and gains after recognized expenses and losses under the applicable reporting basis, before considering owner investments and distributions outside performance.
Other comprehensive income	Revenues, expenses, gains, and losses included in comprehensive income but excluded from net income for the period because specific US GAAP requires that presentation.

Source material: Classify amounts before comparing statements, Follow net income and OCI into equity

2.2a (analyze) — Classify disposals and unusual items within the income statement.

5 concepts. Existing material covers all of them.

Teach to understand	Definition
Held-for-sale long-lived asset	A long-lived asset or disposal group that satisfies the applicable dated classification criteria for recovery principally through sale rather than continuing use.

Teach to apply	Definition
Gain or loss on disposal	The income effect arising when supported net consideration from an asset disposition differs from the asset's carrying amount at derecognition.

Teach to analyze	Definition
Discontinued operation	A disposed or held-for-sale component or group of components that meets the current US GAAP presentation criteria for separate reporting as a strategic shift with a major effect on the entity's operations and financial results.
Strategic shift	A disposal or planned disposal of a component that has, or will have, a major effect on an entity's operations and financial results, which is the condition for reporting the component as a discontinued operation.
Unusual or infrequent item	A material transaction or event that is unusual in nature, infrequent in occurrence, or both, reported as a separate component of income from continuing operations rather than as an extraordinary item.

Source material: Does the disposal leave continuing operations?

2.2b (apply) — Present the financial-statement effects of discontinued operations.

4 concepts. Existing material covers all of them.

Teach to apply	Definition
Gain or loss on disposal	The income effect arising when supported net consideration from an asset disposition differs from the asset's carrying amount at derecognition.
Intraperiod tax allocation	The assignment of total income tax expense or benefit among continuing operations and other statement categories under the applicable incremental allocation guidance.

Teach to analyze	Definition
Discontinued operation	A disposed or held-for-sale component or group of components that meets the current US GAAP presentation criteria for separate reporting as a strategic shift with a major effect on the entity's operations and financial results.
Income from continuing operations	The income-statement component for the reporting entity's operations and other recognized items that remain after separating qualifying discontinued operations, determined for the stated period under applicable US GAAP.

Source material: Does the disposal leave continuing operations?

2.3a (analyze) — Determine whether an arrangement should be accounted for as a contract with a customer under ASC 606.

2 concepts. Existing material covers all of them.

Teach to understand	Definition
Contract combination	The treatment of two or more contracts entered into at or near the same time with the same customer or related parties as one contract when the specified Topic 606 relationship criteria are met.

Teach to apply	Definition
Contract with a customer	An agreement within Topic 606 between parties that creates enforceable rights and obligations and satisfies the model's contract criteria for an exchange with a customer.

Source material: Establish scope and the accounting contract

2.3b (analyze) — Determine the performance obligations in a customer contract.

1 concepts. Existing material covers all of them.

Teach to analyze	Definition
Performance obligation	A promise in a customer contract to transfer a distinct good or service, a distinct bundle, or a qualifying series of substantially the same distinct goods or services.

Source material: Map promises before counting performance obligations

2.3c (analyze) — Determine the transaction price for a customer contract.

3 concepts. Existing material covers all of them.

Teach to apply	Definition
Transaction price	The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected for third parties.

Teach to analyze	Definition
Variable consideration	Consideration whose amount can vary because of discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties, or other uncertainty in the customer arrangement.
Variable consideration constraint	The limit that includes estimated variable consideration in transaction price only to the extent it is probable that a significant cumulative revenue reversal will not occur when the uncertainty is resolved.

Source material: Estimate consideration, then constrain it

2.3d (apply) — Allocate the transaction price to performance obligations.

3 concepts. Existing material covers all of them.

Teach to apply	Definition
Standalone selling price	The price at which an entity would sell a promised good or service separately to a customer at contract inception, observed directly when available or estimated using suitable evidence.
Transaction price	The amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected for third parties.
Transaction price allocation	The assignment of transaction price to performance obligations generally in proportion to their standalone selling prices, with specified exceptions for allocating discounts or variable consideration.

Source material: Establish standalone prices and allocate the contract

2.3e (analyze) — Determine when and how much revenue to recognize for each performance obligation.

5 concepts. Existing material covers all of them.

Teach to apply	Definition
Revenue	An inflow or other enhancement of assets, a settlement of liabilities, or a combination of both that results from delivering or producing goods, rendering services, or carrying out other activities.

Teach to analyze	Definition
Measure of progress	A consistently applied output or input method that faithfully depicts an entity's progress toward complete satisfaction of an over-time performance obligation.
Revenue recognized at a point in time	Recognition when control transfers at a particular point because the performance obligation does not satisfy an over-time criterion.
Revenue recognized over time	Recognition as performance occurs when one of Topic 606's over-time criteria is met, using a faithful measure of progress toward complete satisfaction.
Transfer of control	The customer obtaining the ability to direct the use of and obtain substantially all remaining benefits from a promised asset, which determines when or as a performance obligation is satisfied.

Source material: Recognize performance over time only after proving the path, Locate point-in-time control and route special arrangements

2.3f (analyze) — Classify and account for the balances arising from a customer contract.

3 concepts. Existing material covers all of them.

Teach to apply	Definition
Contract liability	An obligation to transfer goods or services to a customer for which the entity has received consideration or consideration is due from the customer.
Contract with a customer	An agreement within Topic 606 between parties that creates enforceable rights and obligations and satisfies the model's contract criteria for an exchange with a customer.

Teach to analyze	Definition
Contract asset	An entity's right to consideration for transferred goods or services when that right is conditional on something other than only the passage of time.

Source material: Reconcile contract balances, receivables, entries, and costs

Unit 3 · 31 of 32 concepts covered · 2 meetings · Thu 10/1 to Tue 10/6

Financial position and current obligations

How should a company report its resources and current obligations?

3.1a (analyze) — Determine the balance-sheet classification of a reported item.

10 concepts. Existing material covers all of them.

Teach to understand	Definition
Balance-sheet presentation ordering	The stated sequencing of classified balance-sheet line items and subtotals, selected under the applicable presentation framework and entity facts without changing recognition, measurement, or totals.
Current ratio	A date-specific liquidity indicator computed by dividing total current assets by total current liabilities under a stated classification and measurement basis.
Liquidity	An entity's capacity to obtain and deploy cash or other available resources to meet obligations as they come due without unacceptable loss or disruption.
Other-assets presentation	A residual balance-sheet presentation category for recognized noncurrent assets that are not separately presented within a more informative caption under the applicable reporting framework and entity facts.

Teach to apply	Definition
Balance sheet	A financial statement that presents an entity's recognized assets, liabilities, and equity at a specified date under the applicable reporting framework.
Classified financial statement	A financial statement that organizes recognized items into decision-relevant categories, line items, and subtotals under applicable presentation criteria while preserving the statement's totals and articulation.

Teach to analyze	Definition
Current asset	An asset classified within the current section of a classified balance sheet because it meets the applicable realization, sale, consumption, availability, or operating-cycle criteria of the reporting framework.
Current liability	A liability classified within the current section of a classified balance sheet because it meets the applicable settlement, operating-cycle, maturity, or other current-classification criteria of the reporting framework.
Operating cycle	The recurring span in which an entity commits resources to its principal operating activity and ultimately realizes cash from the related goods or services, used in relevant balance-sheet classification and liquidity analysis.
Working capital	Under the broad current-balance definition, the amount by which total current assets exceed total current liabilities at a specified date, computed as current assets minus current liabilities.

Source material: Find why a set of statements does not agree, Current and noncurrent classification, Calculate the liquidity screens—and then challenge them

3.1b (evaluate) — Evaluate a claim about financial position against the balance sheet's limits.

1 concepts. 1 still need text.

Teach to analyze	Definition
Balance sheet limitation text to write	A constraint on what a reported balance sheet can show, arising from resources and obligations it does not recognize, from amounts measured on bases other than current value, and from judgment in classification.

Source material: Find why a set of statements does not agree, Current and noncurrent classification, Calculate the liquidity screens—and then challenge them

3.1c (analyze) — Determine whether reported amounts support a valid comparison.

5 concepts. Existing material covers all of them.

Teach to apply	Definition
Average balance	A stated approximation of the stock of an account available during a period, often computed as the arithmetic mean of aligned beginning and ending balances when more representative observations are unavailable.
Common-size financial statement	A financial-statement presentation that expresses each selected line as a proportion of a declared statement-specific base, commonly net sales for an income statement and total assets for a balance sheet.
Horizontal analysis	Analysis of corresponding financial-statement amounts across periods using absolute changes, percentage changes, or indexes under explicit comparison and base-period conventions.

Teach to analyze	Definition
Ratio comparability	The degree to which ratio inputs and definitions are aligned well enough across entities or periods for a stated comparison, with material differences identified rather than silently normalized.
Comparative financial statements	Financial statements that present corresponding amounts for two or more periods or entities under an identified comparison basis so changes and composition can be analyzed without losing statement provenance.

Source material: Control ratio inputs before dividing

3.2a (apply) — Account for an ordinary current operating obligation.

2 concepts. Existing material covers all of them.

Teach to understand	Definition
Accounts payable	A liability account representing amounts owed to suppliers for goods or services received on ordinary credit terms before payment.
Accrued expense	An expense recognized for resources or services used in the current period before the related cash payment, with a corresponding liability for the unsettled amount.

Source material: Close payroll, leave, and operating accruals

3.2b (analyze) — Determine whether a debt obligation is current or noncurrent.

8 concepts. Existing material covers all of them.

Teach to understand	Definition
Subjective acceleration clause	A debt provision allowing a creditor to accelerate maturity under a condition that is not objectively determinable, requiring current-guidance analysis of classification and disclosure.

Teach to apply	Definition
Current portion of long-term debt	The portion of a longer-term borrowing classified current because it is contractually due within the applicable current horizon, after applying relevant refinancing and other classification guidance.

Teach to analyze	Definition
Current liability	A liability classified within the current section of a classified balance sheet because it meets the applicable settlement, operating-cycle, maturity, or other current-classification criteria of the reporting framework.
Current ratio	A date-specific liquidity indicator computed by dividing total current assets by total current liabilities under a stated classification and measurement basis.
Debt covenant violation	Noncompliance with a debt provision that can alter the lender's rights, borrower classification, disclosure, waiver analysis, and future-compliance assessment under current guidance.
Liquidity	An entity's capacity to obtain and deploy cash or other available resources to meet obligations as they come due without unacceptable loss or disruption.
Short-term obligation expected to be refinanced	A short-term obligation evaluated for noncurrent classification under current US GAAP using both intent and qualifying evidence of ability to refinance on a long-term basis.
Working capital	Under the broad current-balance definition, the amount by which total current assets exceed total current liabilities at a specified date, computed as current assets minus current liabilities.

Source material: Classify maturities and refinancing evidence, Control covenants, waivers, and later evidence

3.2c (analyze) — Determine the reporting treatment for a loss contingency.

5 concepts. Existing material covers all of them.

Teach to understand	Definition
Gain contingency	An existing uncertain condition whose resolution may confirm an asset or reduction of a liability, generally kept out of income until realization is appropriately assured under the governing guidance.

Teach to apply	Definition
Contingency range measurement	Measurement of a recognized loss contingency using the best estimate within a supported range, or the minimum only when no amount within that range is a better estimate.

Teach to analyze	Definition
Loss contingency	An existing condition involving uncertainty that future events will resolve by confirming an asset impairment or liability incurrence under the applicable reporting guidance.
Loss contingency disclosure	Decision-useful note information about the nature and possible financial effect of a qualifying loss exposure, including additional exposure beyond an accrual when applicable.
Loss contingency recognition	The decision to accrue a loss when the applicable US-GAAP evidence supports both a probable balance-sheet-date loss condition and reasonable estimation, subject to specialized guidance.

Source material: Use the loss-contingency matrix, Measure ranges and control disclosure

3.2d (analyze) — Determine the accounting treatment for a customer warranty.

5 concepts. Existing material covers all of them.

Teach to apply	Definition
Assurance warranty liability	An estimated obligation for qualifying warranty coverage that assures a sold product complies with agreed specifications rather than providing a distinct additional service.
Unearned revenue	A liability arising in a basic cash-first arrangement when an entity receives consideration before satisfying the related performance or refund obligation, with the liability reduced and revenue recognized as qualifying performance occurs.
Warranty liability rollforward	A reconciliation of opening warranty liability, provisions for current sales, estimate revisions, claims settled, and ending liability for the stated coverage population and period.

Teach to analyze	Definition
Performance obligation	A promise in a customer contract to transfer a distinct good or service, a distinct bundle, or a qualifying series of substantially the same distinct goods or services.
Warranty in a customer contract	A promise associated with a sale that is accounted for as a separate performance obligation when it provides service beyond assurance that the product complies with agreed specifications, and otherwise under the applicable warranty-liability guidance.

Source material: Build the assurance-warranty rollforward

Unit 4 · 46 of 50 concepts covered · 4 meetings · Thu 10/8 to Tue 10/20

Cash flows and receivables

The allowance for credit losses is a guess about next year that goes on this year's balance sheet as a number. What separates a defensible guess from earnings management?

4.1a (analyze) — Determine the proper classification and presentation of cash-related items.

5 concepts. 3 still need text.

Teach to understand	Definition
Compensating balance text to write	A minimum cash balance a borrower agrees to maintain with a lender as a condition of a credit arrangement, which reduces cash actually available and raises the effective cost of the borrowing.

Teach to apply	Definition
Cash	An asset consisting of currency and deposits available for withdrawal on demand, subject to the reporting entity's rights, restrictions, and the applicable accounting framework.
Cash equivalent text to write	A short-term, highly liquid investment readily convertible to a known amount of cash and so near maturity that it presents insignificant risk of change in value from interest rate movement.
Cash-equivalent original-maturity test	The policy and instrument-fact analysis that tests a highly liquid investment's maturity from its acquisition date, rather than its remaining maturity at a later reporting date, within the Topic 230 cash-equivalent definition.

Teach to analyze	Definition
Restricted cash text to write	Cash whose use is limited by contract, regulation, or management designation, reported separately from unrestricted cash and included with cash in the totals the statement of cash flows reconciles.

Source material:

4.1b (create) — Prepare a complete bounded statement of cash flows.

6 concepts. Existing material covers all of them.

Teach to apply	Definition
Statement of cash flows	A financial statement that classifies period cash receipts and payments as operating, investing, or financing activities and reconciles the beginning and ending cash-related totals defined by the applicable reporting framework.

Teach to analyze	Definition
Cash-flow articulation	The linkage by which classified operating, investing, and financing cash flows reconcile the beginning cash-related total to the corresponding ending total reported with the financial position statement.
Financing cash flow	The net cash inflow or outflow from activities classified as financing under the applicable reporting framework, including specified cash transactions through which owners and creditors provide or recover capital.
Investing cash flow	The net cash inflow or outflow from activities classified as investing under the applicable reporting framework, including specified transactions in productive assets, loans, and investments other than cash equivalents.
Noncash investing and financing activity	An investing or financing transaction that changes recognized assets, liabilities, or equity without a cash receipt or payment in the period and is therefore excluded from cash-flow section totals while remaining subject to applicable disclosure requirements.
Operating cash flow	The net cash inflow or outflow from activities classified as operating under the applicable reporting framework, commonly including cash consequences of transactions that enter the determination of net income.

Source material: Classify the cash, then prepare the statement, Reconcile the cash—and challenge the classification, Derive operating cash adjustments from account rollforwards, Reconcile net income to operating cash flow

4.1c (analyze) — Reconcile accrual-basis net income to net cash from operating activities.

5 concepts. Existing material covers all of them.

Teach to understand	Definition
Depreciation	The systematic allocation of a tangible long-lived asset's depreciable amount to expense over the periods expected to receive its service potential under the selected method and estimates.
Gain or loss on disposal	The income effect arising when supported net consideration from an asset disposition differs from the asset's carrying amount at derecognition.

Teach to apply	Definition
Indirect method	A presentation of operating cash flow that begins with net income and reconciles it to net cash from operating activities through supported noncash income effects, operating-balance changes, and other applicable adjustments.

Teach to analyze	Definition
Changes in operating assets and liabilities	Period changes in relevant operating asset and liability balances that, after controlling for scope and noncash movements, help reconcile accrual-basis net income with operating cash flow.
Operating cash flow	The net cash inflow or outflow from activities classified as operating under the applicable reporting framework, commonly including cash consequences of transactions that enter the determination of net income.

4.2a (apply) — Derive selected direct-method operating cash amounts from accrual records.

3 concepts. Existing material covers all of them.

Teach to understand	Definition
Direct-method operating cash flow	An operating-section presentation of major classes of gross operating cash receipts and gross operating cash payments for the reporting period.

Teach to apply	Definition
Accounts receivable	A recognized financial asset representing an unconditional right to consideration from a customer, measured and presented under the applicable recognition, credit-loss, and disclosure requirements.

Teach to analyze	Definition
Changes in operating assets and liabilities	Period changes in relevant operating asset and liability balances that, after controlling for scope and noncash movements, help reconcile accrual-basis net income with operating cash flow.

4.2b (analyze) — Analyze the relationship among revenue, receivables, and customer collections across periods.

3 concepts. Existing material covers all of them.

Teach to understand	Definition
Revenue disclosure	Information about the nature, amount, timing, and uncertainty of revenue and cash flows from customer contracts, including disaggregation, contract balances, performance obligations, and significant judgments.

Teach to analyze	Definition
Accounts receivable	An asset account representing amounts customers owe the entity from ordinary credit sales or services when the entity has a qualifying right to payment.
Cash-flow articulation	The linkage by which classified operating, investing, and financing cash flows reconcile the beginning cash-related total to the corresponding ending total reported with the financial position statement.

Source material:

4.2c (evaluate) — Evaluate reported earnings using operating cash flow and a defined free-cash-flow measure.

2 concepts. Existing material covers all of them.

Teach to analyze	Definition
Free cash flow	A non-GAAP, nonuniform cash-flow measure commonly presented as net cash provided by operating activities less capital expenditures, with the issuer's exact definition, reconciliation, and limitations made explicit.
Operating cash-to-income comparison	An analytical comparison of same-period operating cash flow and net income using an absolute gap and, only under a declared meaningful denominator convention, a ratio, followed by reconciliation of the underlying differences.

Source material: Challenge income with operating-cash evidence

4.3a (analyze) — Select the applicable time-value model and calculate the present or future value of stated cash flows.

12 concepts. Existing material covers all of them.

Teach to understand	Definition
Stated annual rate	An annualized rate quote that, under the declared convention used here, is divided by the number of compounding intervals per year to obtain the rate applied each period.

Teach to apply	Definition
Annuity	A finite sequence of equal cash flows separated by equal periods, with a declared first-payment date and valuation date.
Annuity due	An annuity whose equal payments occur at the beginning of each equal period, including one payment on the valuation date.
Cash-flow timeline	An ordered representation that places each cash amount at a stated date or period boundary and records the valuation date, interval convention, and direction before time-value calculations begin.
Compounding	An accumulation process in which each period's rate applies to the opening balance for that period, including prior accumulated amounts that remain in the base.
Discounting	The process of translating a later-dated amount to an earlier valuation date by applying the reciprocal of the relevant compound growth factor.
Future value	The amount at a specified later date that is equivalent, under declared assumptions, to one or more amounts at earlier dates after applying the relevant accumulation process.
Ordinary annuity	An annuity whose equal payments occur at the end of each equal period, so the first payment is one full period after the valuation date.
Periodic interest rate	The decimal growth or discount rate applied once to each interval represented by one period in a time-value calculation.
Present value	The amount at a specified valuation date that is equivalent, under declared cash-flow, rate, timing, and measurement assumptions, to one or more amounts at other dates.
Time value of money	The principle that cash amounts at different dates are not directly comparable until they are translated to a common valuation date using a stated rate, timing convention, and set of assumptions.

Teach to analyze	Definition
Effective annual rate	The one-year growth rate that incorporates the effect of compounding at the declared periodic rate for the declared number of intervals in a year.

Source material: Control the timeline and rate-period units, Compound and discount single sums, Compare stated, periodic, and effective rates, Classify and value level payment streams

4.3b (apply) — Measure a note receivable using the effective-interest method.

5 concepts. Existing material covers all of them.

Teach to apply	Definition
Accrued interest receivable	Interest earned under a financial instrument through the reporting date but not yet received, controlled separately when its presentation, nonaccrual, writeoff, or credit-loss policy differs from principal.
Discount or premium on a note receivable	The difference between a note's face amount and its initial present-value carrying amount when contractual cash flows and the supported effective yield differ.
Effective-interest method for notes receivable	A method that recognizes interest by applying the effective periodic yield to the note's opening carrying amount and updating that amount for cash interest and accretion or amortization.
Notes receivable	Written financial claims whose principal, stated interest, payment dates, maturity, collateral, and other enforceable terms require separate recognition, measurement, collection, and credit-loss analysis.
Present value	The amount at a specified valuation date that is equivalent, under declared cash-flow, rate, timing, and measurement assumptions, to one or more amounts at other dates.

Source material: Measure notes and effective interest

4.4a (apply) — Measure a trade receivable at initial recognition.

5 concepts. 1 still need text.

Teach to apply	Definition
Accounts receivable	An asset account representing amounts customers owe the entity from ordinary credit sales or services when the entity has a qualifying right to payment.
Sales discount text to write	A reduction in the amount a customer pays for settling within a stated period, which is variable consideration that reduces the transaction price when the customer is expected to take it.

Teach to analyze	Definition
Contract asset	An entity's right to consideration for transferred goods or services when that right is conditional on something other than only the passage of time.
Price concession and credit-loss boundary	The distinction between a change in consideration the entity expects to be entitled to and a failure to collect an established receivable or contract asset.
Trade and nontrade receivables	Claims to cash or other assets classified by their origin in ordinary customer activity or another transaction and by the right, counterparty, term, and presentation that govern them.

Source material: Establish the right and the receivable population

4.4b (evaluate) — Develop a supportable estimate of expected credit losses.

10 concepts. Existing material covers all of them.

Teach to apply	Definition
Allowance for credit losses	A valuation account deducted from the financial asset's amortized-cost basis to present the amount expected to be collected, subject to the applicable measurement model.
Credit-loss expense or benefit	The period effect needed, together with writeoffs, recoveries, and other changes, to move the allowance from its opening amount to the current required estimate.
Loss-rate method	An expected-credit-loss method that applies supportable loss rates to defined exposure pools after controlling historical basis and relevant adjustments.
Receivable aging schedule	A controlled grouping of receivable exposures by elapsed delinquency or another time-based status for collection, credit-risk, and estimation analysis.
Receivable writeoff	Removal of a receivable's gross amount and its associated allowance when the asset is deemed uncollectible under the entity's controlled policy.
Recovery of a written-off receivable	Cash or another supported recovery associated with a receivable previously written off, recorded through the applicable gross and allowance or recovery path.

Teach to analyze	Definition
Current-conditions, forecast, and reversion adjustment	A documented bridge from relevant historical credit-loss information to conditions at the reporting date, reasonable and supportable forecasts, and a controlled return to historical information beyond the forecastable period.
Expected credit loss	A current estimate of contractual cash flows not expected to be collected over the financial asset's contractual term, using relevant historical experience, current conditions, and reasonable and supportable forecasts.
Pooled and individual credit-loss evaluation	Evaluation of financial assets with shared risk characteristics on a collective basis and separate evaluation when an asset no longer shares those characteristics.
Subsequent-collection evidence	Cash-collection information obtained after the reporting date and evaluated under a documented policy for what it evidences about conditions and expected credit losses at that date.

Source material: Build the aging and defensible risk pools, Estimate expected credit loss by pool, Adjust history and control later-cash evidence, Roll the allowance through writeoffs and recoveries

Unit 5 · 37 of 41 concepts covered · 4 meetings · Thu 10/29 to Tue 11/10

Inventory

Three companies with the same purchases and the same sales can report three different gross margins, and all three are correct. What does that tell us about a financial statement?

5.1a (analyze) — Analyze what periodic and perpetual inventory records can establish.

5 concepts. 1 still need text.

Teach to apply	Definition
Cost of goods sold	The recognized cost of inventory transferred out in connection with goods sold during a reporting period under the applicable accounting policies and scope.
Inventory cost	Qualifying purchase, conversion, and other costs assigned to inventory because they bring the goods to their present location and condition, subject to scope and abnormal-cost boundaries.

Teach to analyze	Definition
Inventory shrinkage text to write	The excess of inventory the accounting records show over the inventory a physical count finds, arising from theft, damage, spoilage, or recording error, and measurable only under a perpetual system.
Periodic inventory system	A recordkeeping system that accumulates purchases during the period and derives ending inventory and cost of goods sold after a reporting-date count or other supported quantity determination.
Perpetual inventory system	A recordkeeping system that updates inventory units and assigned cost as purchases, sales, returns, and other movements occur, then reconciles those records to physical and ownership evidence.

Source material: Build qualifying cost and recordkeeping control

5.1b (analyze) — Determine the inventory owned at a reporting date.

5 concepts. 1 still need text.

Teach to understand	Definition
Inventory purchase commitment	A contractual obligation to purchase inventory in a future transaction whose recognition, loss, and disclosure consequences depend on enforceability, scope, contract terms, market evidence, and current guidance.

Teach to apply	Definition
Shipping terms text to write	The contractual terms that fix the point at which title and risk of loss for goods in transit pass from seller to buyer, and so decide whose inventory the goods are at a reporting date.

Teach to analyze	Definition
Consigned inventory	Goods delivered to another party for sale while the consignor retains ownership until the agreement's sale or other transfer condition occurs.
Goods in transit	Goods moving between parties at the reporting date whose inventory recognition depends on the substantive transfer terms and evidence, not their physical arrival alone.
Inventory ownership and cutoff	The reporting-date determination of which goods the entity owns and which inventory purchases, sales, and cost transfers belong in the period.

Source material: Prove ownership and cutoff before pricing the count

5.2a (evaluate) — Calculate and evaluate how a cost-flow assumption affects reported results and comparability.

7 concepts. 2 still need text.

Teach to apply	Definition
Dollar-value LIFO text to write	A method of applying last-in first-out to a pool of inventory measured in base-year dollars, in which layers are identified from changes in base-year cost and then restated to the prices of the year each layer was added.
FIFO cost flow	A cost-flow assumption that assigns the earliest available inventory costs to cost of goods sold and leaves the most recent costs in ending inventory.
Inventory cost layer	A separately tracked quantity of inventory units and their assigned unit cost, date, pool, and source used in a cost-flow schedule.
LIFO cost flow	A US-GAAP cost-flow assumption that assigns the most recent available costs to cost of goods sold and leaves older costs in ending inventory, subject to scope, consistency, tax, disclosure, and reporting-basis boundaries.
Specific identification	A cost-assignment method that traces the actual cost of an identified, noninterchangeable or separately tracked unit to sale or ending inventory.
Weighted-average inventory cost	A cost-flow method that assigns an average cost per unit from the cost and quantity in the relevant pool, either for the full period or after each purchase.

Teach to analyze	Definition
Inventory price index text to write	A ratio of current-year cost to base-year cost for a defined inventory pool, used to restate a pool's ending inventory to base-year prices and back again so that quantity changes can be separated from price changes.

Source material: Trace specific units and FIFO layers, Compute periodic and moving average without rounding drift, Build LIFO layers and a qualified comparison

5.2b (apply) — Restate LIFO inventory information to a comparable basis.

3 concepts. Existing material covers all of them.

Teach to analyze	Definition
Comparability	The quality that enables users to identify meaningful similarities and differences among financial phenomena across entities, periods, or reporting choices after relevant bases and contexts are aligned.
LIFO liquidation	A reduction in a LIFO inventory pool that assigns older cost layers to current cost of goods sold because current additions do not replace units sold.
LIFO reserve	The disclosed difference between inventory measured on a non-LIFO comparison basis, commonly FIFO, and inventory reported using LIFO at the same date and scope.

Source material: Trace inventory errors across statements and periods, Reconcile the inventory note and reporting basis

5.3a (analyze) — Determine and record the subsequent measurement of inventory under the applicable reporting framework.

4 concepts. Existing material covers all of them.

Teach to apply	Definition
Inventory write-down	A reduction of inventory's carrying amount when the applicable lower-of-cost measurement test produces an amount below recorded cost.
Lower of cost and net realizable value	A subsequent-measurement rule that reports an in-scope inventory population at the lower of its cost and supported net realizable value at the measurement date.
Lower of cost or market	The retained US-GAAP subsequent-measurement path for inventory measured using LIFO or the retail inventory method, comparing cost with designated market constrained by a ceiling and floor.

Teach to analyze	Definition
Inventory net realizable value	The estimated ordinary-course selling price of inventory less reasonably predictable costs of completion, disposal, and transportation within the applicable reporting guidance.

Source material: Route subsequent measurement before comparing amounts, Record write-downs and keep purchase commitments separate

5.3b (analyze) — Trace an inventory error through the statements and periods it affects.

1 concepts. Existing material covers all of them.

Teach to analyze	Definition
Inventory error	An incorrect inventory quantity, ownership, cost, cutoff, or measurement amount that propagates through cost of goods sold, income, assets, equity, and often the next period.

Source material: Trace inventory errors across statements and periods, Reconcile the inventory note and reporting basis

5.4a (evaluate) — Calculate and evaluate an inventory estimate for a stated use.

3 concepts. Existing material covers all of them.

Teach to apply	Definition
Gross profit	Net sales less the cost of goods sold, the first subtotal on a multiple-step income statement and the amount available to cover operating and other costs.
Gross profit method	An estimation method that applies a supportable historical gross-margin relationship to net sales to estimate cost of goods sold and ending inventory when direct quantity-cost evidence is unavailable or incomplete.
Retail inventory method	An inventory estimation system that applies a controlled cost-to-retail relationship to ending inventory at retail, with method-specific treatment of markups, markdowns, sales, and other retail movements.

Source material: Estimate inventory with gross-profit and retail evidence

5.4b (analyze) — Calculate and analyze the cash conversion cycle and its operating components.

13 concepts. Existing material covers all of them.

Teach to apply	Definition
Common-size financial statement	A financial-statement presentation that expresses each selected line as a proportion of a declared statement-specific base, commonly net sales for an income statement and total assets for a balance sheet.
Credit purchases	Qualifying goods or services received during a period that create ordinary trade payables rather than being settled in cash at receipt, under the declared analytical scope.
Horizontal analysis	Analysis of corresponding financial-statement amounts across periods using absolute changes, percentage changes, or indexes under explicit comparison and base-period conventions.
Net credit sales	Sales included in a stated period that create qualifying customer receivables, reduced by the returns, allowances, or other deductions included in the declared analytical convention.

Teach to analyze	Definition
Accounts payable turnover	A period ratio that divides a declared supplier-credit purchase flow by a representative average trade-payable balance to describe settlement-cycle frequency under the stated convention.
Accounts receivable turnover	A period ratio that divides a declared receivable-creating sales flow, preferably net credit sales, by a representative average trade-receivable balance to describe collection-cycle frequency under the stated convention.
Cash conversion cycle	A linked operating-efficiency measure that adds declared Inventory and receivable days and subtracts declared payable days to estimate the interval for which operating resources are financed before customer cash recovery.
Comparative financial statements	Financial statements that present corresponding amounts for two or more periods or entities under an identified comparison basis so changes and composition can be analyzed without losing statement provenance.
Days inventory outstanding	The declared days-equivalent of Inventory turnover, computed from the period's day count and the same cost-flow and average-Inventory convention.
Days payables outstanding	The declared days-equivalent of Accounts Payable turnover, computed from the period's day count and the same supplier-credit purchase and average-payable convention.
Days sales outstanding	The declared days-equivalent of Accounts Receivable turnover, computed from the period's day count and the same numerator and denominator convention.
Inventory turnover	A period ratio that divides cost of goods sold by a representative average Inventory balance to describe cost-flow frequency under the declared scope and accounting basis.
Operating efficiency analysis	Analysis that relates aligned operating flows to average operating balances and converts selected turnover measures to days, while treating the results as evidence prompts rather than direct measures of managerial quality.

Source material: Align comparative statements before measuring change, Build horizontal and common-size statement views, Reconcile operating numerator inputs, Compute operating turnover and days, Reconcile and challenge the cash conversion cycle

Unit 6 · 29 of 41 concepts covered · 4 meetings · Thu 11/12 to Tue 11/24

Property, plant, and equipment

Whether a cost becomes an asset or an expense moves reported income for years afterward. Who decides which one it is?

6.1a (analyze) — Determine the initial cost of a long-lived tangible asset from the form and terms of its acquisition.

12 concepts. 4 still need text.

Teach to understand	Definition
Contributed asset	An asset received in a nonreciprocal transfer, requiring the recipient to identify the transferor relationship, entity type, restrictions, measurement evidence, and corresponding credit under applicable guidance.

Teach to apply	Definition
Building text to write	A property, plant, and equipment account holding the cost of a structure an entity uses in operations, including the costs of acquiring or constructing it and readying it for its intended use, and which is depreciated over its useful life.
Land text to write	A property, plant, and equipment account holding the cost of ground an entity uses in operations, including the costs of readying it for its intended use, and which is not depreciated because its useful life is indefinite.
Land improvement text to write	A structural addition to ground, such as paving, fencing, or lighting, that has a limited useful life and is therefore capitalized separately from land and depreciated over that life.
Avoidable interest	The interest cost that theoretically could have been avoided if qualifying- asset expenditures had not been made, subject to the entity's actual interest cost and the supported capitalization period.
Deferred payment asset purchase text to write	An acquisition of an asset settled by a note or other deferred payment rather than by cash at the acquisition date, recorded at the cash equivalent price with the difference from the face amount treated as interest.
Lump-sum asset acquisition	An acquisition in which one consideration amount obtains multiple separately tracked assets and must be assigned across them using a supported allocation basis.
Present value	The amount at a specified valuation date that is equivalent, under declared cash-flow, rate, timing, and measurement assumptions, to one or more amounts at other dates.
Self-constructed asset	A long-lived asset an entity builds for its own use, whose cost is assembled from supported direct and allocated construction inputs through the readiness date.

Teach to analyze	Definition
Asset acquisition cost	The supported amount initially assigned to an acquired long-lived asset, including consideration and qualifying directly attributable costs required to bring the asset to the location and condition necessary for its intended use.
Subsequent expenditure on property, plant, and equipment	A post-acquisition cost evaluated for whether it maintains existing service, creates or enhances future service potential, replaces a component, or falls within another recognition and derecognition model.
Nonmonetary asset exchange	A transaction in which an entity gives up a noncash asset to obtain another asset, requiring explicit scope, commercial-substance, fair-value, boot, and derecognition analysis rather than treatment as an ordinary cash purchase.

Source material: Control acquisition cost before allocating a bundle, Decide what subsequent spending changes, Route exchanges, shares issued, and contributed assets, Build and finance a qualifying asset

6.1b (analyze) — Determine the treatment of spending after a tangible asset is acquired.

1 concepts. Existing material covers all of them.

Teach to analyze	Definition
Subsequent expenditure on property, plant, and equipment	A post-acquisition cost evaluated for whether it maintains existing service, creates or enhances future service potential, replaces a component, or falls within another recognition and derecognition model.

Source material: Control acquisition cost before allocating a bundle, Decide what subsequent spending changes

6.1c (apply) — Determine the capitalization boundary and calculate construction interest for a bounded case.

2 concepts. Existing material covers all of them.

Teach to apply	Definition
Avoidable interest	The interest cost that theoretically could have been avoided if qualifying- asset expenditures had not been made, subject to the entity's actual interest cost and the supported capitalization period.
Self-constructed asset	A long-lived asset an entity builds for its own use, whose cost is assembled from supported direct and allocated construction inputs through the readiness date.

Source material: Route exchanges, shares issued, and contributed assets, Build and finance a qualifying asset

6.2a (evaluate) — Select and apply a depreciation pattern that represents the asset's expected use.

13 concepts. 6 still need text.

Teach to understand	Definition
Group and composite depreciation	Depreciation methods that apply a pooled rate to multiple assets, with group accounting generally pooling similar assets and composite accounting pooling dissimilar assets.

Teach to apply	Definition
Change in accounting estimate	A revision of a reported amount or estimation input caused by new information, new experience, or later developments rather than by correcting a prior misuse or omission of information available when the earlier accounting was performed.
Depreciation	The systematic allocation of a tangible long-lived asset's depreciable amount to expense over the periods expected to receive its service potential under the selected method and estimates.
Partial-period depreciation	Depreciation assigned to less than a full reporting period using a supported in-service date, disposal date, activity measure, and consistently applied convention.

Teach to analyze	Definition
Accumulated depreciation	A credit-normal contra-asset that accumulates depreciation recognized on a related depreciable asset through the reporting date and is deducted from the related gross carrying amount in deriving carrying amount.
Activity-method depreciation text to write	An allocation pattern that charges depreciation in proportion to the asset's measured use during the period rather than to the passage of time.
Carrying amount	The amount at which an asset or liability is recognized in the statement of financial position after applicable accumulated allocations, allowances, or other measurement adjustments at the reporting date.
Declining-balance depreciation text to write	An accelerated allocation pattern that applies a constant rate to an asset's carrying amount, producing larger charges in early periods and smaller ones later.
Depreciation method	The systematic pattern used to allocate an asset's depreciable amount across service periods or activity units based on the supported consumption pattern.
Salvage value text to write	The amount an entity expects to obtain from an asset at the end of its useful life, net of the expected cost of disposal, which is excluded from the amount allocated to expense.
Straight-line depreciation text to write	An allocation pattern that charges an equal amount of an asset's depreciable amount to each period of its useful life.
Sum-of-the-years'-digits depreciation text to write	An accelerated allocation pattern that applies a declining fraction to a fixed depreciable amount, with the denominator equal to the sum of the digits of the useful life.
Useful life text to write	The period over which an entity expects an asset to provide service to that entity, determined from physical, economic, and legal limits rather than from the asset's total possible existence.

Source material: Allocate cost across methods, periods, and pools, Revise depreciation estimates without rewriting history

6.2b (apply) — Account for a change in a depreciation estimate.

4 concepts. 2 still need text.

Teach to apply	Definition
Change in accounting estimate	A revision of a reported amount or estimation input caused by new information, new experience, or later developments rather than by correcting a prior misuse or omission of information available when the earlier accounting was performed.

Teach to analyze	Definition
Carrying amount	The amount at which an asset or liability is recognized in the statement of financial position after applicable accumulated allocations, allowances, or other measurement adjustments at the reporting date.
Salvage value text to write	The amount an entity expects to obtain from an asset at the end of its useful life, net of the expected cost of disposal, which is excluded from the amount allocated to expense.
Useful life text to write	The period over which an entity expects an asset to provide service to that entity, determined from physical, economic, and legal limits rather than from the asset's total possible existence.

Source material: Allocate cost across methods, periods, and pools, Revise depreciation estimates without rewriting history

6.2c (apply) — Account for the disposal of a depreciable asset.

5 concepts. 1 still need text.

Teach to apply	Definition
Asset disposal	The supported removal of an asset and its related cumulative balances from an entity's accounts when a sale or other qualifying disposition ends the entity's recognized asset position under the applicable guidance.
Partial-period depreciation	Depreciation assigned to less than a full reporting period using a supported in-service date, disposal date, activity measure, and consistently applied convention.

Teach to analyze	Definition
Carrying amount	The amount at which an asset or liability is recognized in the statement of financial position after applicable accumulated allocations, allowances, or other measurement adjustments at the reporting date.
Gain or loss on disposal	The income effect arising when supported net consideration from an asset disposition differs from the asset's carrying amount at derecognition.
Gain or loss peripheral text to write	An increase or decrease in equity arising from a transaction outside an entity's central and continuing operations, reported net of related cost below the operating subtotal rather than as revenue or expense.

Source material: Derecognize an asset and trace sale proceeds, Reconcile and release the tangible-asset close

6.3a (analyze) — Determine the impairment of a long-lived tangible asset under the applicable reporting model.

5 concepts. Existing material covers all of them.

Teach to understand	Definition
Involuntary conversion	The loss, destruction, theft, or compulsory taking of an asset and any related insurance or condemnation recovery, analyzed as distinct recognition events with separate timing and collectibility evidence.

Teach to analyze	Definition
Carrying amount	The amount at which an asset or liability is recognized in the statement of financial position after applicable accumulated allocations, allowances, or other measurement adjustments at the reporting date.
Held-for-sale long-lived asset	A long-lived asset or disposal group that satisfies the applicable dated classification criteria for recovery principally through sale rather than continuing use.
Long-lived asset impairment	A standards-governed reduction of a long-lived asset group's carrying amount when the applicable impairment conditions are met and the required measurement produces a loss.
Recoverability test	In the bounded US GAAP held-and-used impairment model, the screen that compares an asset group's carrying amount with the applicable sum of undiscounted cash flows to determine whether impairment measurement is required.

Source material: Test a held-and-used asset group for impairment, Route assets leaving use without collapsing the events

6.3b (analyze) — Analyze return on assets through profit margin and asset turnover.

5 concepts. Existing material covers all of them.

Teach to apply	Definition
Average balance	A stated approximation of the stock of an account available during a period, often computed as the arithmetic mean of aligned beginning and ending balances when more representative observations are unavailable.

Teach to analyze	Definition
Carrying amount	The amount at which an asset or liability is recognized in the statement of financial position after applicable accumulated allocations, allowances, or other measurement adjustments at the reporting date.
Return on assets	A profitability relationship that divides same-period net income by average total assets under declared definitions to measure period income per average recognized asset dollar.
Total asset turnover	An efficiency relationship that divides same-period net sales by a declared measure of average total assets to show sales generated per average asset dollar during the period.
Net profit margin	A profitability relationship that divides same-period net income by net sales under declared definitions to show the portion of each sales dollar remaining after all recognized income-statement effects included in net income.

Source material: Decompose return on assets into margin and turnover

6.4a (apply) — Calculate and account for the depletion of a natural resource.

2 concepts. Existing material covers all of them.

Teach to apply	Definition
Depletion	The systematic allocation of a natural-resource asset's supported depletable amount to units extracted, followed by assignment between inventory and expense based on unit disposition.
Natural-resource asset	A controlled mineral, timber, or other extractive resource whose supported depletable cost is allocated by estimated recoverable units as extraction occurs.

Source material: Extract, allocate, and reconcile natural-resource cost, Measure and roll an asset retirement obligation

6.4b (apply) — Measure and roll forward an asset retirement obligation.

4 concepts. 1 still need text.

Teach to apply	Definition
Accretion expense text to write	The increase in the carrying amount of an asset retirement obligation from the passage of time, computed by applying the credit-adjusted risk-free rate used at initial measurement to the opening liability balance.
Asset retirement cost	The amount added to a tangible long-lived asset when a qualifying asset retirement obligation is initially recognized, then allocated over the related service period or productive units.
Asset retirement obligation	A liability for a legal obligation associated with the retirement of a tangible long-lived asset when the recognition and measurement conditions of the applicable guidance are met.
Present value	The amount at a specified valuation date that is equivalent, under declared cash-flow, rate, timing, and measurement assumptions, to one or more amounts at other dates.

Source material: Extract, allocate, and reconcile natural-resource cost, Measure and roll an asset retirement obligation

Unit 7 · 24 of 25 concepts covered · 2 meetings · Tue 12/1 to Thu 12/3

Intangible assets

The most valuable assets of the largest companies in the world are mostly missing from their balance sheets. Is that a defect or a decision?

7.1a (analyze) — Determine the recognition, classification, and initial measurement of an acquired intangible asset.

3 concepts. Existing material covers all of them.

Teach to analyze	Definition
Finite-lived intangible asset	A recognized intangible asset whose useful life to the reporting entity is limited by economic, legal, contractual, competitive, renewal, obsolescence, or other supported factors.
Identifiable intangible asset	A nonphysical asset distinguished from goodwill because its identity is supported by separability or contractual or other legal rights under the applicable recognition model.
Indefinite-lived intangible asset	A recognized intangible asset for which the current evidence does not establish a foreseeable limit on the period over which it is expected to contribute to cash flows.

Source material: Identify the right before measuring it

7.1b (apply) — Determine and record the subsequent accounting for an intangible asset.

4 concepts. 1 still need text.

Teach to apply	Definition
Intangible asset amortization	Systematic allocation of a finite-lived intangible asset's depreciable amount over its supported useful life using the pattern of expected consumption when reliably determinable.

Teach to analyze	Definition
Finite-lived intangible asset	A recognized intangible asset whose useful life to the reporting entity is limited by economic, legal, contractual, competitive, renewal, obsolescence, or other supported factors.
Subsequent expenditure on intangible asset	Spending after an intangible asset is recognized, classified by the purpose of the spending and the US GAAP model that applies to that activity rather than added automatically to the existing asset.
Useful life text to write	The period over which an entity expects an asset to provide service to that entity, determined from physical, economic, and legal limits rather than from the asset's total possible existence.

Source material: Set the life and amortization clock

7.1c (analyze) — Determine the reporting treatment of research and development costs.

3 concepts. Existing material covers all of them.

Teach to apply	Definition
Research and development cost	A cost of planned search, investigation, or translation of knowledge into a new or significantly improved product, process, technique, formula, or design within the applicable R&D scope.

Teach to analyze	Definition
Acquired in-process research and development	An identifiable research-and-development project acquired in a transaction for which the applicable business-combination or asset-acquisition model determines initial and subsequent accounting.
Alternative future use	A supported use of R&D materials, equipment, or facilities in another project or operating activity beyond the current research-and-development effort.

Source material: Separate internal R&D from acquired projects

7.1d (analyze) — Determine the applicable accounting model and capitalization boundary for software costs.

6 concepts. Existing material covers all of them.

Teach to apply	Definition
Current internal-use software capitalization	Classification of internal-use software costs under the current Subtopic 350-40 project-stage model before ASU 2025-06 adoption.
Internal-use software	Software acquired, developed, or modified to meet the reporting entity's internal needs when the applicable facts do not establish a plan to market it externally.
Software to be sold, leased, or marketed	Software developed for sale, lease, licensing, or other external marketing and therefore routed through the applicable external-product software model rather than the internal-use model.

Teach to analyze	Definition
Cloud computing implementation cost	A customer cost of implementing a hosting or cloud arrangement whose accounting depends first on whether the arrangement contains a software license or is a service contract and then on the nature and timing of the activity.
Internal-use software standards clock	The explicit control linking an internal-use software conclusion to the entity's annual period, early-adoption status, transition method, and either current or ASU 2025-06 pending content.
Technological feasibility	The evidence-supported threshold in the externally marketed software model after which qualifying production costs enter a capitalization window until the product is available for sale.

Source material: Control the internal-use software standards clock, Separate the hosting service from implementation, Use the technological-feasibility window

7.2a (apply) — Measure and record goodwill or a bargain-purchase gain in a business combination.

5 concepts. Existing material covers all of them.

Teach to understand	Definition
Private-company goodwill alternative	An elective accounting alternative available to an eligible private company that changes subsequent goodwill accounting, including amortization and impairment testing.

Teach to apply	Definition
Bargain purchase gain	The gain recognized when the fair value of identifiable net assets acquired in a business combination exceeds the consideration transferred, recorded in earnings after the acquirer reassesses its identification and measurement.
Goodwill	An asset recognized in a business combination for the acquisition-method residual after supplied consideration and other required amounts are compared with recognized identifiable assets acquired and liabilities assumed.
Goodwill residual	The acquisition-method excess of transferred consideration, qualifying noncontrolling interest, and any previously held interest over the supplied acquisition-date fair value of identifiable net assets.

Teach to analyze	Definition
Business-combination intangible asset	An identifiable intangible asset recognized in a transaction stipulated to be a business combination and measured from supplied acquisition-date evidence under the applicable acquisition method.

Source material: Allocate identifiable assets before goodwill

7.2b (analyze) — Determine and record the impairment of an intangible asset or goodwill under the applicable US GAAP model.

5 concepts. Existing material covers all of them.

Teach to apply	Definition
Goodwill impairment	A loss recognized under the applicable goodwill model when the supported reporting-unit comparison indicates that goodwill's carrying amount is not recoverable, subject to the governing measurement limit and elections.
Indefinite-lived intangible asset impairment	The applicable periodic and event-driven comparison for an indefinite-lived intangible asset, using its own supported unit of account and supplied carrying amount and fair value.

Teach to analyze	Definition
Intangible asset rollforward	A class-by-class reconciliation of opening to ending gross and accumulated intangible balances, with additions, amortization, impairment, disposals, reclassifications, foreign-exchange effects, and goodwill movements kept distinct.
Long-lived asset impairment	A standards-governed reduction of a long-lived asset group's carrying amount when the applicable impairment conditions are met and the required measurement produces a loss.
Reporting unit	The applicable organizational unit to which acquired goodwill is assigned and at which the core goodwill impairment model is applied.

Source material: Test, reconcile, and release the intangible close