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

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

, Contents


Chaptero1 Introduction.................................................................................................. 1

Chaptero2 AccountingoUnderoIdealoConditions .......................................................... 7

Chaptero3 TheoDecisionoUsefulnessoApproachotooFinancialoReporting ...................... 68

Chaptero4 EfficientoSecuritiesoMarkets.......................................................................129

Chaptero5 TheoValueoRelevanceoofoAccountingoInformation .....................................153

Chaptero6 TheoMeasurementoApproachotooDecisionoUsefulness ................................ 194

Chaptero7 MeasurementoApplications ........................................................................237

Chaptero8 TheoEfficientoContractingoApproachotooDecisionoUsefulness .................... 285

Chaptero9 AnoAnalysisoofoConflict .......................................................................... 321

Chaptero10ooExecutiveoCompensation ........................................................................ 371

Chaptero11ooEarningsoManagement ............................................................................ 425

Chaptero12ooStandardoSetting:oEconomicoIssues ......................................................... 487

Chaptero13ooStandardoSetting:oPoliticalo Issues............................................................ 527




oPearsonoCanadaoInc.

,Scott,oFinancialoAccountingoTheory Instructor’soSolutionsoManualoChaptero1



CHAPTERo1o

INTRODUCTION

1.1 TheoObjectiveoofoThisoBook

1.2 SomeoHistoricaloPerspective

1.3 Theo2007-2008oMarketoMeltdowns

1.4 EfficientoContracting

1.5 AoNoteoonoEthicaloBehaviour

1.6 Rules-Basedov.oPrinciples-BasedoAccountingoStandards

1.7 TheoComplexityoofoInformationoinoFinancialoAccountingoandoReporting

1.8 TheoRoleoofoAccountingoResearch

1.9 TheoImportanceoofoInformationoAsymmetry

1.10 TheoFundamentaloProblemoofoFinancialoAccountingoTheory

1.11 RegulationoasoaoReactionotootheoFundamentaloProblem

1.12 TheoOrganizationoofoThisoBook

1.12.1 IdealoConditions

1.12.2 AdverseoSelection

1.12.3 MoraloHazard

1.12.4 StandardoSetting

1.12.5 TheoProcessoofoStandardoSetting

1.13 RelevanceoofoFinancialoAccountingoTheoryotooAccountingoPractice

, Scott,oFinancialoAccountingoTheory Instructor’soSolutionsoManualoChaptero1


LEARNINGoOBJECTIVESoANDoSUGGESTEDoTEACHINGoAPPROACHES

1. TheoBroadoOutlineoofotheoBook

IouseoFigureo1.1oasoaotemplateotoodescribeotheobroadooutlineoofotheobook.oSinceoth
eostudentsotypicallyohaveonotohadoaochanceotooreadoChaptero1oinotheofirstocourseos
ession,oIostickofairlyocloselyotootheochapteromaterial.

TheomajoropointsoIodiscussoare:

• Accountingoinoanoidealosetting.oHere,opresent-value-
basedoaccountingoisonatural.oIogoooverotheoidealoconditionsoneededof
orosuchoaobasisoofoaccountingotoobeofeasible,obutodoonotogoointoomuch
o detailobecauseothisotopicoisocoveredoinogreaterodepthoinoChaptero2.

• Anointroductionotootheoconceptoofoinformationoasymmetryoandoresulti
ngoproblemsoofoadverseoselectionoandomoralohazard.oTheseoproble
msoareobasicotootheobookoandoIofeeloitoisodesirableoforotheostudentsoto
o haveoao“firstogo”oatothemoatothisopoint.oIoconcentrateoonotheointuitiono
underlyingotheotwooproblems.oForoexample,oadverseoselectionocanob
eoillustratedobyoaskingowhoowouldobeofirstoinolineotoopurchaseolifeoins
uranceoifothereowasonoomedicaloexamination,oorowhatoqualityoofoused
o carsoareolikelyotoobeobroughtotoomarket.oForomoralohazardoIotryotoopin
o themodownoonohowohardotheyowouldoworkoinothisocourseoifothereower
eonooexams.

• Theoenvironmentoinowhichofinancialoaccountingoandoreportingooperat
es.oMyomainogoaloatothisopointoisothatotheostudentsodoonototakeothisoe
nvironmentoforogranted.oIodiscussotheoproceduresoofostandardosettin
gobrieflyoandopointooutothatothisoisoreallyoaoprocessooforegulation.oInot
heopast,othereohaveobeenowell-
knownocasesoofoderegulation,osuchoasoairlines,otrucking,ofinancialoin
stitutions,opowerogeneration.oHowever,oweoareoenteringowhatoisolikel
yotoobeoaoperiodoofoincreasingoregulation,oatoleastoforofinancialoinstitut