APPLIES TO ACADEMIC YEAR 2014/2015

ELE 3735 Financial accounting

Responsible for the course
John Christian Langli

Department
Department of Accounting - Auditing and Law

Term
According to study plan

ECTS Credits
7,5

Language of instruction
Norwegian

Introduction
Firms may choose from different accounting languages and dialects in Norway. The main alternatives are GRS (God RegnskapsSkikk = good accounting practice in Norway) and IFRS (International Financial Reporting Standards). Within each of these alternatives there are dialects. All listed companies must apply IFRS, other companies may choose freely between the main alternatives. Some companies may also choose between the dialects. This means that firms may calculate revenue, expenses, assets, liabilities and equity using five different set of rules.

The diversity in how to calculate accounting numbers is a challenge to both preparers and users. Preparers must know which set of rules to apply and how to apply the accounting standards and valuation methods that belong to the chosen set of rules. Users must know how to interpret figures prepared under different set of rules in order to make informed decisions.

The aim of this course is to provide users and prepares with the knowledge that enables them to navigate correctly in an environment with different ways to measure revenue, expenses, assets, liabilities and equity. The course will put particular emphasis on GRS since 99 % of all Norwegian firms use GRS. However, since the largest firms (including listed firms) use IFRS the course will also cover key differences between GRS and IFRS.

Learning outcome
Acquired knowledge
Students should be able to:

• explain the structure of the Norwegian accounting regulation
• identify sources that may explain how various accounting issues are to be handled.

• compare and contrast income-based and balance sheet-based accounting models
• use the fundamental accounting principles in GRS to find solutions to accounting problems
• prepare individual accounts for non-listed Norwegian firms using GRS
• give example of main differences between GRS and IFRS

• The regulation of the obligation to prepare financial statements in Norway
• How to measure net income? Revenue-based and balance sheet-based accounting models, GRS vs. IFRS and accounting models based on fair value and historical cost
• How should we understand and interpret the fundamental accounting principles in GRS?
• General GRS-rules for recognition and measurement of fixed assets, immaterial assets, financial assets (fixed and current), inventory and accounts receivable
• Special issues with GRS, e.g. amortized cost, leasing, pensions, factoring, deferred taxes, employee options and revenue recognition (further information will be given during the course)
• Recognition and measurement according to IFRS, e.g. accounting for investment property, biological assets (e.g. farmed fish and forest) and property, plant and equipment (further information will be given at during the course).
• Accounting and earnings quality