Solution Manual For Financial Accounting Theory 7th Edition by William R. Scott, Patricia O'Brien Chapters 1 - 13, Complete

Solution Manual For Financial Accounting Theory
7th Edition by William R. Scott, Patricia O'Brien
Chapters 1 - 13, Complete

, Contents


ChapterR1 Introduction.................................................................................................. 1

ChapterR2 AccountingRUnderRIdealRConditions ........................................................... 7

ChapterR3 TheRDecisionRUsefulnessRApproachRtoRFinancialRReporting ....................... 68

ChapterR4 EfficientRSecuritiesRMarkets .......................................................................129

ChapterR5 TheRValueRRelevanceRofRAccountingRInformation ......................................153

ChapterR6 TheRMeasurementRApproachRtoRDecisionRUsefulness .................................194

ChapterR7 MeasurementRApplications ........................................................................237

ChapterR8 TheREfficientRContractingRApproachRtoRDecisionRUsefulness ..................... 285

ChapterR9 AnRAnalysisRofRConflict ........................................................................... 321

ChapterR10RRExecutiveRCompensation ......................................................................... 371

ChapterR11RREarningsRManagement ............................................................................. 425

ChapterR12RRStandardRSetting:REconomicRIssues .......................................................... 487

ChapterR13RRStandardRSetting:RPoliticalRIssues............................................................. 527




PearsonRCanadaRInc.
R

,Scott,RFinancialRAccountingRTheory Instructor’sRSolutionsRManualRChapterR1



CHAPTERR1RI

NTRODUCTION

1.1 TheRObjectiveRofRThisRBook

1.2 SomeRHistoricalRPerspective

1.3 TheR2007-2008RMarketRMeltdowns

1.4 EfficientRContracting

1.5 ARNoteRonREthicalRBehaviour

1.6 Rules-BasedRv.RPrinciples-BasedRAccountingRStandards

1.7 TheRComplexityRofRInformationRinRFinancialRAccountingRandRReporting

1.8 TheRRoleRofRAccountingRResearch

1.9 TheRImportanceRofRInformationRAsymmetry

1.10 TheRFundamentalRProblemRofRFinancialRAccountingRTheory

1.11 RegulationRasRaRReactionRtoRtheRFundamentalRProblem

1.12 TheROrganizationRofRThisRBook

1.12.1 IdealRConditions

1.12.2 AdverseRSelection

1.12.3 MoralRHazard

1.12.4 StandardRSetting

1.12.5 TheRProcessRofRStandardRSetting

1.13 RelevanceRofRFinancialRAccountingRTheoryRtoRAccountingRPractice

, Scott,RFinancialRAccountingRTheory Instructor’sRSolutionsRManualRChapterR1


LEARNINGROBJECTIVESRANDRSUGGESTEDRTEACHINGRAPPROACHES

1. TheRBroadROutlineRofRtheRBook

IRuseRFigureR1.1RasRaRtemplateRtoRdescribeRtheRbroadRoutlineRofRtheRbook.RSinceRtheRst
udentsRtypicallyRhaveRnotRhadRaRchanceRtoRreadRChapterR1RinRtheRfirstRcourseRsession,
I stickRfairlyRcloselyRtoRtheRchapterRmaterial.
R R




TheRmajorRpointsRIRdiscussRare:

• AccountingRinRanRidealRsetting.RHere,Rpresent-value-
basedRaccountingRisRnatural.RIRgoRoverRtheRidealRconditionsRneededRforR
suchRaRbasisRofRaccountingRtoRbeRfeasible,RbutRdoRnotRgoRintoRmuchRdeta
ilRbecauseRthisRtopicRisRcoveredRinRgreaterRdepthRinRChapterR2.

• AnRintroductionRtoRtheRconceptRofRinformationRasymmetryRandRresulting
R problemsRofRadverseRselectionRandRmoralRhazard.RTheseRproblemsRar
eRbasicRtoRtheRbookRandRIRfeelRitRisRdesirableRforRtheRstudentsRtoRhaveRaR“f
irstRgo”RatRthemRatRthisRpoint.RIRconcentrateRonRtheRintuitionRunderlyingRt
heRtwoRproblems.RForRexample,RadverseRselectionRcanRbeRillustratedRb
yRaskingRwhoRwouldRbeRfirstRinRlineRtoRpurchaseRlifeRinsuranceRifRthereRw
asRnoRmedicalRexamination,RorRwhatRqualityRofRusedRcarsRareRlikelyRtoRb
eRbroughtRtoRmarket.RForRmoralRhazardRIRtryRtoRpinRthemRdownRonRhowRh
ardRtheyRwouldRworkRinRthisRcourseRifRthereRwereRnoRexams.

• TheRenvironmentRinRwhichRfinancialRaccountingRandRreportingRoperate
s.RMyRmainRgoalRatRthisRpointRisRthatRtheRstudentsRdoRnotRtakeRthisRenviro
nmentRforRgranted.RIRdiscussRtheRproceduresRofRstandardRsettingRbriefl
yRandRpointRoutRthatRthisRisRreallyRaRprocessRofRregulation.RInRtheRpast,Rth
ereRhaveRbeenRwell-
knownRcasesRofRderegulation,RsuchRasRairlines,Rtrucking,RfinancialRinsti
tutions,RpowerRgeneration.RHowever,RweRareRenteringRwhatRisRlikelyRtoR
beRaRperiodRofRincreasingRregulation,RatRleastRforRfinancialRinstitutions.RI
nstructors