Intermediate Accounting 1 - MODULE 1

Topics:
1. Course Description
2. Program Intended Learning Outcomes (PILO)
3. Course Intended Learning Outcomes (CILO)
4. Classroom Policies:
● Attendance
● Assignment
● Quizzes And Major Examinations
● Subject Final Requirement
● Grading System
● BSA Qualifying Exam
● Academic Dishonesty
5. Syllabus
6. Review of Financial Assets at Fair Value; Investment in Equity Securities and Investment in Associate
1. Course Description
This course is designed to cover the financial accounting standards and disclosure requirements relative to
derivatives, property, plant and equipment, government grant, intangible assets and investments. It will provide
in-depth discussion about the recognition, measurement, and methods of valuation of assets as presented in the
financial statement. It also guides the students in integrating the theories and accounting principles in
problem-solving situation involving measurement, recognition, derecognition, and presentation requirements of
derivatives, property, plant and equipment, government grant, intangible assets and investments.

2. Program Intended Learning Outcomes (PILO)

At the end of this program, a graduate of this program should be able to:
● Resolve business issues and problems, with a global and strategic perspective using knowledge and
technical proficiency in the areas of financial accounting and reporting, cost accounting and
management, accounting and control, taxation, and accounting information systems;

● Conduct accountancy research through independent studies of relevant literature and appropriate use of
accounting theory and methodologies;

● Employ technology as a business tool in capturing financial and non-financial information, generating
reports and making decisions;

● Apply knowledge and skills to successfully respond to various types of assessments; and (including
professional licensure and certifications); and

● Confidently maintain a commitment to good corporate citizenship, social responsibility and ethical
practice in performing functions as an accountant.

3. Course Intended Learning Outcomes (CILO)

By the end of this course, the students will be able to:
● Interpret theories and principles relative to the frameworks of accounting.

● Construct balance sheet using the measurement, recognition and de-recognition, valuation and statement
presentation of derivates, property, plant and equipment, government grant, intangible assets and
investments.

● Analyze the disclosure requirements in preparation of the financial statements.

4. Classroom Policies
● Course Assessment

● Attendance. Please refer to the CCA Student Handbook (p. 12). Attendance - ​Student attendance and
participation in this course are essential to learning the material. ​Students are expected to attend each
class and laboratory session, be on time, and stay for the entire session. ​Failure to attend will negatively
affect your grade​.

● Mandatory attendance is required during synchronous class (Face-to-Face or Virtual). As per college
policy, students are expected to complete activities / assignments on-time. While some projects span the
entire semester, others are due on specific dates throughout the semester. Ten percent (10%) of the total
points available (or a minimum of 1 point) are deducted from a student's grade on a project when it is
received after the stated due time (usually 5:00 p.m.) on the due date unless otherwise stated on the
rubric for the individual project/assignment. An additional 5% (or a minimum of 1 point) is deducted for
each day the project/assignment is late. Work that is more than one week late will not be accepted unless
a valid supporting document, indicating delay is out of the student’s control, is submitted to the
instructor such as but not limited to medical certificates. Be sure to consult the rubric for the individual
project for more complete details. Students who are unable to complete the work during the semester are
eligible for an ​Incomplete ​only if the reason fits the College's guidelines for an incomplete. A grade of
Incomplete will automatically be converted to a grade of Failure (F) after two semesters if the student
does not comply with the requirements for completion.

● Tests and Make-ups: All quizzes for this course must be completed. The final examination will be
delivered during class schedule. All of these will be produce in Google form.

● Extra Credit. Students are expected to complete the projects / activities as required for the class and to
do the best they can on each project throughout the semester. Every attempt is made to provide a
complete OBTLP that provides an accurate overview of the courses. However, circumstances and events
may make it necessary for the instructor to modify the OBTLP during the semester. This may depend, in
part, on the progress, needs and experiences of the students.
● Students participate in the discussion, and answer the discussion questions. Failure to do those in 3
weeks will mean dropping from the course.
 ● Requirements such as activities / assignments / projects should be submitted / posted on or before the
given deadline.

● Coordinate with the professor, using various modes given on concerns problems regarding the
requirements. Concerns should be communicated to the professor on the schedule provided in the
registration form.
● Students are expected to wear proper attire during synchronous discussions.

5. Syllabus ​(Overview)

6. Review of Financial Assets at Fair Value; Investment in Equity Securities

and Investment in Associate
● Chapter 15 – 18 of Intermediate Accounting 1. Mr. Conrado Valix, Jose Peralta and Christian Aris
Valix. Assessment will be made in a True/ False manner and Problem Solving.
Chapter 15: Financial Assets at Fair Value
Investments are assets held by an entity for the ​accretion of wealth of wealth​ through distribution such as
interest interest, royalties, dividends and rentals, for ​capital appreciation​ or for other benefits to the investing
entity such as those obtained through trading relationship. – IASB
QUESTION: IASB stands for?
Examples of Investments include the following:
● Trading Securities
● Investment in Equity Securities
● Investment in Bonds
● Investment in Associate
● Investment in Subsidiary
● Investment Property
● Investment in Fund
● Investment in Joint Venture
QUESTION: Investments are classified as Noncurrent Assets. T/F?
Noncurrent investments may be acquired in accordance with a financial policy looking to the accumulation of
funds for such purposes as plant expansion or liquidation of long-term debt.
Noncurrent investments may represent shareholdings acquired for the purposes of controlling another firm or
creating good customer or supplier relationship.
Investments in land and buildings acquired for capital appreciation are intended to be held for a number of years
to generate income and capital gain. These investment properties are classified as noncurrent investments event
though they may be marketable.
QUESTION: What is a Financial Instrument?
Common examples of Financial Instruments:
● Cash in the form of notes and coins
● Cash in the form of checks
● Cash in bank
● Trade accounts
● Notes and loans
● Debt securities
● Equity securities
Note that most financial instruments involve one party having a contractual right to receive cash or another
financial asset and another party having a contractual obligation to deliver cash or another financial asset.
QUESTION: What is a Financial Asset?
Examples of Financial Assets:
● Cash or currency
● Deposit of cash
● Trade accounts receivable
● Notes receivable
● Loans receivable
● Bonds receivable

QUESTION: A gold bullion deposited in a bank is not considered as financial asset. T/F?
Physical Assets, Intangible Assets, Prepaid Expenses and Leased Assets.
QUESTION: What is a Financial Liability?
Examples of Financial Liabilities:
● Trade accounts payable
● Notes payable
● Loans payable
● Bonds payable
Deferred Revenue, Warranty Obligations and Income Taxes Payable.
Equity Instrument​ – is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Examples:
● Ordinary Share Capital
● Preference Share Capital
● Warrants/ Written Call Options
Redeemable Preference Share – a preference share that provides for mandatory redemption by the issuer or a
preference share that gives the holder the right to require the issuer to redeem the instrument at a future date for
a fixed or determinable amount is a ​financial liability​ because the issuer has a contractual obligation to pay
cash at some future time.
QUESTION: How are Dividends paid to holders of mandatorily redeemable preference share accounted?
QUESTION: How are Financial Assets classified?
FINANCIAL ASSETS AT FAIR VALUE​ ​– measured at FVPL by ‘requirement’, or ‘designation’, or
‘consequence.’
QUESTION: How are Financial Assets at Fair Value classified?
QUIESTION: What is the initial measurement of a Financial Asset?
Subsequent measurement – either at fair value or at amortized cost depending on the entity’s business model for
managing financial assets. Business Model could either be:
● To hold the investments in order to ​realize fair value changes. (at Fair Value)
● To hold investments in order to ​collect contractual cash flows. (at Amortized Cost)
QUESTION: Is it possible to measure a financial asset at FVPL even if the financial asset satisfies the
measurement at amortized cost at initial recognition?
Unrealized Gains and Losses​ on financial assets ​held for trading​ and ​other financial assets measured at
fair value​ and ​are not part of a hedging relationship​ are reported in the ​income statement​.
FV>CA – Unrealized Gain
FV<CA – Unrealized Loss.
Gains and Losses that result from ​actually selling​ the securities are knows as ​Realized Gains and Losses​.
QUESTION: How are Unrealized Gains and Losses on Financial Assets at Amortized Cost recognized?
Subsequent changes in Fair Value of an ​equity instrument​ ​not held in trading​ may be irrevocably presented
in Other Comprehensive Income. But upon derecognition of the financial asset, the difference between the
consideration received and carrying amount is recognized in P/L and the cumulative gain or loss recognized in
OCI will be transferred to Retained Earnings.
RECLASSIFICATION​ – is permitted by standards only when there is a change in the entity’s business model
for managing the financial assets. It should not be frequent and disclosure is a requirement. However, the
following does not result to a change in business model:
● Change in intention related to a particular financial asset.
● Temporary disappearance of a particular market for a financial asset.
● Transfer of financial asset between parts of the entity with different business models.

Reclassification from Fair Value to Amortized Cost – the FV at the reclassification date becomes the new CA of
the financial asset at amortized cost. The ​difference between​ the NEW CA of the financial asset at amortized
cost and the FACE VALUE OF FINANCIAL ASSET shall be AMORTIZED through P/L over the remaining
life of the financial asset using effective interest method.
Reclassification from Amortized Cost to Fair Value – FV is determined at reclassification date and the
difference between the previous CA and the FV is recognized in P/L.

IMPAIRMENT
● No impairment for financial assets at fair value. If there is a decline, it is recognized at either in P/L or
OCI.
● However, financial assets at amortized cost are assessed at the end of each reporting period (difference
between carrying amount and the PV of estimated future cash flows discounted at original effective
interest rate) whether there is any objective evidence of impairment. The CA of the assets shall be
reduced by either directly or through an allowance account. The amount of loss shall be recognized in
P/L.

Reference:
1. Financial Accounting Volume 1, 2011 ed. – Conrado T. Valix, Jose F. Peralta and Christian Aris M. Valix