Page 20 - Financial Statement Analysis
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                                                                                         Contents              xvii

                           Contingencies and                      Accounting for Investment
                             Commitments 173                       Securities 265
                             Contingencies 173                    Disclosures for Investment
                             Commitments 175                       Securities 269
                           Off-Balance-Sheet Financing 176        Analyzing Investment Securities 269
                             Off-Balance-Sheet Examples 176      Equity Method Accounting 272
                           Shareholders’ Equity 184               Equity Method Mechanics 273
                             Capital Stock 184                    Analysis Implications of Intercorporate
                             Retained Earnings 187                 Investments 275
                             Book Value per Share 189            Business Combinations 276
                             Liabilities at the “Edge” of Equity 191  Accounting for Business
                           Appendix 3A:                            Combinations 277
                             Lease Accounting                     Issues in Business Combinations 281
                              and Analysis—Lessor 191             Pooling Accounting for Business
                           Appendix 3B:                            Combinations 287
                             Accounting Specifics for Postretirement  Derivative Securities 290
                              Benefits 193                         Defining a Derivative 291
                                                                  Accounting for Derivatives 291
                         4 Analyzing Investing                    Disclosures for Derivatives 294
                           Activities 220                         Analysis of Derivatives 296
                           Introduction to Current               The Fair Value Option 298
                             Assets 222                           Fair Value Reporting
                             Cash and Cash Equivalents 223         Requirements 298
                             Receivables 224                      Fair Value Disclosures 299
                             Prepaid Expenses 228                 Analysis Implications 301
                           Inventories 228                       Appendix 5A:
                             Inventory Accounting and Valuation 228  International Activities 302
                             Analyzing Inventories 230           Appendix 5B:
                           Introduction to Long-Term              Investment Return Analysis 311
                             Assets 237
                                                              6 Analyzing Operating
                             Accounting for Long-Term Assets 237
                             Capitalizing versus Expensing: Financial  Activities 328
                              Statement and Ratio Effects 239    Income Measurement 330
                           Plant Assets and Natural               Income Concepts—A Recap 330
                             Resources 239                        Measuring Accounting Income 331
                             Valuing Plant Assets and Natural     Alternative Income Classifications
                              Resources 240                        and Measures 332
                             Depreciation 240                    Nonrecurring Items 336
                             Analyzing Plant Assets and Natural   Extraordinary Items 336
                              Resources 244                       Discontinued Operations 338
                           Intangible Assets 248                  Accounting Changes 340
                             Accounting for Intangibles 248       Special Items 343
                             Analyzing Intangibles 249           Revenue Recognition 350
                             Unrecorded Intangibles               Guidelines for Revenue
                              and Contingencies 250                Recognition 351
                                                                  Analysis Implications of Revenue
                         5 Analyzing Investing                     Recognition 353
                           Activities: Intercorporate            Deferred Charges 355
                           Investments 262                        Research and Development 355
                           Investment Securities 264              Computer Software Expenses 357
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