|Contributions to Class Discussion||10%|
|Written Homework (8 Assignments)||15%|
Lectures: 2 sessions / week, 1.5 hours / session
Recitations: 1 session / week, 1 hour / session
Text: Pratt, J. Financial Accounting in an Economic Context. 5th ed. John Wiley & Sons, Inc. (Hereafter cited as Pratt)
Supplement Material: Intel Corporation 2001 Annual Report distributed in class.
Case Pack: Includes supplemental readings and cases, available at campus copy center (hereafter cited to as CP).
Reserve Materials: People have different approaches to learning, and a text which is good for one person may not be the best for another. If you want to seek supplementary sources for the course material, or are interested in more advanced topics, we have placed the following books on reserve in the library:
Stickney, C., and R. Weil. Financial Accounting: An Introduction to Concepts, Methods, and Uses. 10th ed. Thompson/Southwestern, 2003.
Kieso, D., and J. Weygandt. Intermediate Accounting. 10th ed. Wiley, 2001.
The T.A.s are important members of the teaching team and are committed to helping you reach the course objective. They are responsible for the help sessions and for grading most of the written assignments and exams.
There will be weekly T.A. sessions that focus on the record keeping and reporting, computation, and search challenges. The T.A.s will also be available on a limited basis for individual and small-group tutoring.
If you have been attending class and help sessions but are still falling behind you are encouraged to visit us. These meetings will be much more productive if you come well prepared. Whenever possible try to write out your questions and, if possible, map them into the five course challenges. In addition, be familiar with the definitions and notation related to a topic even if you are having conceptual difficulties. Most importantly, don't tell us that you understand something when you are still perplexed. Please make appointments through our secretary.
Your grade will be based on the following weights:
|Contributions to Class Discussion||10%|
|Written Homework (8 Assignments)||15%|
The first four assignments are to be done individually and are intended to help you learn and practice the mechanics of the course material. By this, we mean the work you turn in must be your own, as opposed to copied from another. This does not mean you have to do individual assignments in isolation. We expect that you will need to consult each other in order to understand, or better understand, the material, and may need assistance. Seeking and giving such assistance is encouraged.
Each team should split itself into two groups for the purposes of writing-up the group assignments, though you will likely meet as an entire team to discuss the case or other material the assignment is based on. Only one copy of each assignment will need to be turned in for each group. All group members whose names are on the assignment will receive the same grade. We leave it to each group to control (or allocate) free-ridership.
If you are unsure whether some particular form of interaction is proper under these rules please consult your professor and/or T.A. for clarification.
If you believe an error has been made in grading your homework or exam, you may request a regrade by doing the following: Write a brief note to your T.A. explaining why you think there is an error and submit both the note and the entire assignment or exam to which it pertains. All regrade requests must occur within seven (7) calendar days of the day graded material is returned to the class. We reserve the right to regrade the entire contents of any submitted assignment or exam.
Professional conduct is built upon the idea of mutual respect. Such conduct entails (but is not necessarily limited to):
Class participation grading reflects student adherence to these principles; students gain credit for contributing valuable insights and students lose credit if they fail to adhere to any of the above guidelines. See the Sloan School web site for more information on the MBA Code of Conduct.
This course guide describes the course objective, aspects of our teaching philosophy, some administrative issues, and the daily assignments for the course. We hope it will give you a sense of our commitment to help you make the course a rewarding experience.
Our goal is to help you develop a framework for understanding financial, managerial, and tax reports. Many at the forefront of accounting education have goals generally consistent with this course objective. For example, Dr. Jean Wyer, a former accounting professor and "Dean" of Cooper and Lybrand's educational programs, told professors at an Accounting Doctoral Consortium to abandon debits and credits. To paraphrase Dr. Wyer:
"You should not be teaching debits and credits; they are a holdover from the past that were needed to balance entries and accounts before we had computers. Modern electronic information systems do not have T-accounts or journal entries, and students need only understand a lesson taught the first day of an algebra course to master bookkeeping concepts: Assets = Liabilities + Owners' Equity."
Because 15.515 is likely quite different than you might expect, this guide provides an overview of our objectives, how we plan to get there, and additional details about how each class will be structured.
The essential elements of our strategy to help you reach the course goal are explained in the remainder of this guide: (a) the course challenges, (b) key features of the course game plan, and (c) the daily assignments.
The course goal is divided into five subordinate challenges that can help you organize the way you learn accounting. For example, they can help you distinguish situations where there is a correct answer from those where judgment is required. You can view the challenges as a series of questions you will ask yourself later in your career as either a preparer or user of accounting information. To reach the course goal, you must meet all five challenges and understand how they relate to each other. Acknowledgement is hereby given to Professor G. Peter Wilson for his authorship of The Five Challenges.
As a preparer of accounting reports (accountant, chief financial officer, controller, or other responsible party), having determined the numbers you want to record for an economic event and having made related accounting or tax policy choices (e.g., having decided to recognize revenues, capitalize expenditures, or claim investment tax credits), how do you record this event, how does it impact accounting reports, and how do you subsequently aggregate information from this event and others to create these reports? As a user of accounting reports (investor, creditor, employee, or other stakeholder), given the accounting numbers management reported for an economic event and their accounting choices, you will want to know how the numbers were recorded and how they affect accounting reports. For example, as a user, given a depreciation expense of $10, you will want to know how it was recorded and how this entry affects financial statements.
As a preparer, having chosen the accounting method you will use to measure an economic event from the acceptable alternatives and having made all of the assumptions about the related business activity that are needed to apply this method, how do you compute the number reported in challenge 1? As a user, knowing the accounting procedures management used to produce the numbers recorded in challenge 1 and the information that was needed to execute them, such as management's assumptions about the related business activity, how would you compute them yourself? For example, as a preparer or user, knowing that a zero-coupon bond matures in 10 years, how do you use the implicit interest rate to compute the periodic interest expense?
As a preparer, given your knowledge about the underlying business activity, your choices of acceptable accounting procedures, and your own incentives, how do you choose an accounting procedure and exercise related judgment concerning measurement, recognition, and disclosure? As a user, who has access to less information than preparers about this business activity and about preparers' personal incentives to report or misrepresent it, how do you judge the usefulness of numbers reported in challenge 2 to your decision? For example, as a user, how do you evaluate the assumptions management made when they computed depreciation, including the useful life, residual value, and pattern of future expenses? Do you have access to enough information? Ideally, what other related information would you like to have to address your decision?
As a preparer, to exercise the judgment in challenge 3, how do you first learn as much as possible about the decisions that will be influenced by the reported numbers and the consequences of these decisions on yourself, your reporting entity, and users? As a user, how can the reported numbers help you make a more informed decision? For example, how can you use them to assess the reporting entity's performance and how can you benchmark these performance measures against their historical counterparts, competitors' comparables, and strategic targets? As a user, to meet challenge 3, you will also need to know as much as possible about how others use these numbers and the consequences of their decisions (and your own) on management's reporting and business decisions.
As either a user or a preparer, how do you locate the information needed to meet challenges 1 through 4?
The first two challenges relate to procedural activities that generally have a right answer and are most often associated with accounting (e.g., bookkeeping, tax compliance, and producing managerial reports). Traditionally, introductory accounting courses have focused almost exclusively on these challenges. The judgment challenge is the most difficult to master because it is contextual. That is, you learn judgment by analyzing actual business decisions. The richer the description of the business context in the practice problems you study and the more you know about the reporting managers' character and incentives and about reporting alternatives, the more you will be preparing yourself to deal with complex judgments. The search challenge is a prerequisite for the other four challenges. For example, users of financial reports must first know where companies report their accounting policies to judge the quality of the related numbers (meet the judgment challenge) and they must know where to find the appropriate formulas to meet the computation challenge. Some of the other challenges are also interdependent. For example, users must understand how the numbers were computed to judge their usefulness.
For each session (defined broadly to include a class with the instructor, its preparation, and the related weekly T.A. session) the course guide includes a road map with the following sections: