Solution Manual For Financial Accounting Theory 7th Edition by William R. Scott, Patricia O'Brien All Chapters 1 to 13 complete Verified editon ISBN: 9780273773436

SolutionManualForFinancialAccountingTheory
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7th Edition byWilliam R. Scott, Patricia O'Brien
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vh Chapters 1 - 13, Complete
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, Contents


Chapter1 vh Introduction .................................................................................................. 1

Chapter2 vh AccountingdUnderIdealConditions ............................................................. 7
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Chapter3 vh TheDecisionUsefulnessApproachtoFinancialReporting ............................ 68
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Chapter4 vh EfficientSecuritiesMarkets ......................................................................... 129
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Chapter5 vh TheValueRelevanceofAccountingInformation .......................................... 153
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Chapter6 vh TheMeasurementApproachtodDecisionUsefulness .................................... 194
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Chapter7 vh MeasurementApplications.......................................................................... 237
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Chapter8 vh TheEfficientContractingApproachtoDecisionUsefulness .......................... 285
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Chapter9 vh AnAnalysisofConflict .............................................................................. 321
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Chapter10 ExecutiveCompensation ........................................................................... 371
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Chapter11 EarningsManagement............................................................................... 425
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Chapter12 StandardSetting:EconomicIssues ............................................................. 487
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Chapter13 StandardSetting:PoliticalIssues ................................................................ 527
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,Scott,FinancialAccountingTheory
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CHAPTER 1 VH




VH INTRODUCTIO

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1.1 TheObjectiveofThisBook
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1.2 SomeHistorical Perspective
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1.3 The2007-2008MarketMeltdowns
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1.4 Efficient Contracting vh




1.5 ANoteonEthicalBehaviour
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1.6 Rules-Based v. Principles-Based Accounting Standards vh vh vh vh




1.7 The Complexityof Information in FinancialAccountingand Reporting
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1.8 TheRoleofAccountingResearch
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1.9 The Importance of Information Asymmetry
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1.10 TheFundamentalProblem of FinancialAccounting Theory
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1.11 RegulationasaReactiontotheFundamentalProblem vh vh vh vh vh vh vh




1.12 TheOrganizationofThisBook
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1.12.1 IdealConditions vh




1.12.2 AdverseSelection vh




1.12.3 MoralHazard vh




1.12.4 Standard Setting vh




1.12.5 TheProcessofStandardSetting vh vh vh vh




1.13 Relevance of FinancialAccountingTheoryto Accounting Practice
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, Scott,FinancialAccountingTheory
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LEARNING OBJECTIVES AND SUGGESTED TEACHING APPROACHES
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1. TheBroad OutlineoftheBook
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I use Figure 1.1 as a template to describe the broad outline of the book. Since the
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vh students typically have notdhad a chance to read Chapter 1 in the firstdcoursesessi on, I
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vh stick fairly closely to the chapter material.
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ThemajorpointsIdiscussare:
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• Accountinginanidealsetting.Here,present-value- vh vh vh vh vh vh




based accounting is natural. I go over the ideal conditions needed fo r vh vh vh vh vh vh vh vh vh vh vh vh




sucha basis of accounting to be feasible, butddo not go into much d etail
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• Anintroductiontotheconceptofinformationasymmetryandresultin g
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vh problems of adverse selection and moral hazard. These problems are vh vh vh vh vh vh vh vh vh




basictothebookdandIfeelitisdesirableforthestudentstohave a“firstgo”
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at themat this point.Iconcentrate onthe intuitionunderly ingthetwo
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problems.Forexample,adverseselectioncanbeillustrat edbyasking
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whowouldbefirstinlinetopurchaselife insuranceifth ere was nomedical
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vh examination, or what quality of used cars are lik ely to be brought to vh vh vh vh vh vh vh vh vh vh vh vh vh




vh market. For moralhazard I tryto pin them down on how hard they would vh vh vh vh vh vh vh vh vh vh vh vh vh vh




vh work inthis course if there were no exams. vh vh vh vh vh vh vh




• The environment in which financial accounting and reporting operat es.
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My maingoalat this point is thatdthestudents donot takethis env ironment
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for granted. I discuss the procedures of standard setting br iefly and point
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out thatdthis is really a process of regulation. In the pa st, there have been
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known cases of deregulation, such as airlines, trucking, financial ins vh vh vh vh vh vh vh vh vh




vh titutions,powergeneration.However,weareentering whatdislikelyt obe vh vh vh vh vh vh vh vh vh vh




aperiodofincreasingregulation,atleastforfinancialinstitution
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s.Instructors
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