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ECAU601401
Financial Accounting Theory
3
Advanced Financial Accounting 2
This course is part of the financial accounting core subjects. It
discusses the frame of reference that affects financial
accounting practices. Understand that the different financial
accounting theories are often developed to perform different
functions: (1) to describe accounting practice; and (2) to
prescribe particular accounting practices. Understand that
theories of accounting are developed as a result of applying
various value judgements and that acceptance of one theory in
preference to others will in part be tied to ones own value
judgements. As a consequence, students should critically evaluate
theories (the underlying logic, assumptions made and evidence
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Subject
Learning
Outcomes
Subject
Synopsis/
Indicative
Syllabus
Topic
LO
Introduction
Accounting Theory
Construction
Overview of Accounting
Theory
Pragmatic Theories
Syntactic and Semantic
Theories
Normative Theories
Positive Theories
Other Perspectives and Issues
Applying Theory to
Accounting Regulation
The Theories of Regulation
Relevant to Accounting and
Auditing
How the Theories of
Regulation Apply to
Accounting and Auditing
Practice
The Regulatory Framework for
Financial Reporting
Required
Reading
Godfrey Ch.1
Godfrey Ch.2
Godfrey Ch.3
Scott Ch.13 (sub
13.2)
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6&7
8&9
Godfrey Ch.4
PSAK-KDP2LK
(Conceptual
Framework)
Godfrey Ch.5
Godfrey Ch.6
Godfrey Ch.7
Godfrey Ch.8
PSAK 16 (2011
revision)
PSAK 19 (2010
revision)
PSAK 50 (2010
revision) and PSAK
55 (2011 revision) ,
except Derivative
Paik (2009)
McCarthy and
Schneider (2001)
Godfrey Ch.9
Godfrey Ch.10
PSAK 23 (2010
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Revenue Measurement
Challenges for Standard
Setters
Issues for Auditors
10
11
12
13
14
Expenses
Expenses Defined
Expenses Recognition
Expenses Measurement
Challenges for Standard
Setters
Positive Theory of
Accounting Policy and
Disclosure
Contracting Theory
Agency Theory
Agency Problems
Signaling Theory
Political Process
Agency Cost
Empirical Test of Theory and
Evaluating the Theory
Issues for Auditors
Capital Market Research
Philosophy of Positive
Accounting Theory
Strength of Positive Theory
Scope of Positive Accounting
Theory
Capital Market Research and
the Efficient Market
Hypothesis
Impact of Accounting Profits
Announcements on Share
Prices
Trading Strategies
Issues for Auditors
Behavioral Research in
Accounting (BAR)
Definition and Scope
Why is BAR Important?
Representativeness: the
Evidence
Accounting and Behavior
Limitation of BAR
Issues for Auditors
Standard Setting
Standard Setting: Economics
Issues
Standard Setting: Political
Issues
Emerging Issues in
Accounting and Auditing
Factors Influencing Accounting
and Auditing Research,
revision)
PSAK 34 (2010
revision)
Mintz (2009)
Martin (2009)
Caylor (2010)
Godfrey Ch.11
Godfrey Ch.12
Godfrey Ch.13
e,f
Godfrey Ch.14
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Teaching/Lear
ning
Methodology
Assessment
Method in
Alignment
with Intended
Learning
Outcomes
%
Weight
ing
Continuous
Assessment
GROUP
Group Paper
(10%)
Presentation
(10%)
INDIVIDUAL
Mid Term Exam
(30%)
Final Exam
(30%)
Participation
Collaborative
and Active
Learning (10%)
Quizzes (10
100%
Intended Learning
Outcomes to be Assessed
a
40
%
30
%
30
%
30
%
30
%
15
%
25
%
20%
80%
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Details of
learning
methods
Student Study
Effort
Expected
32
Hours
10
Hours
28
Hours
Collaborative Learning
Presentation
Other student study effort:
Preparation for project/assignment/tests
Reading List
and
References
30
Hours
Required Readings:
1. Godfrey, Jayne, Allan Hodgson, Ann Tarca, Jane Hamilton, and Scott
Holmes. Accounting Theory, 7th Ed. John Wiley & Sons, Inc. 2010.
(GOD)
2. Scott, William R. Financial Accounting Theory, 6th Ed. Pearson
Prentice Hall, 2012. (WRS)
3. Paik, Gyung. The Value Relevance of Fixed Asset Revaluation
Reserves
in
International
Accounting.
International
Management Review, 2009. (Paik, 2009)
4. McCarthy, Mark G., and Douglas K. Schneider. Classification of
Financial Instruments with Characteristics of Both Debt and
Equity: Evidence Concerning Convertible Redeemable
Preferred Stock. Academy of Accounting and Financial Studies
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