Intermediate Accounting III

Course Description

Intermediate Accounting III is the third component of a three-part sequence examining the theory and practical application of accounting procedures, standards, and regulatory frameworks. It emphasizes the analysis of revenue and expense accounts together with tax and disclosure considerations, covering investments, revenue recognition, income taxes, employee benefits, leases, cash flows, and error analysis.

Within the SCNS taxonomy, ACG is the Accounting prefix, and the 3000-level number places this in the upper division. Daytona State publishes it at 3 credits, prerequisite ACG3113, offered fall and spring, giving approximately 45 contact hours consistent with the published ACG3101 and ACG3113.

The topic list is not arbitrary — it is the hardest material in financial accounting, deliberately placed last. Revenue recognition, leases, and income taxes are the areas where the standards are most complex, where they have most recently been rewritten, and where the CPA examination concentrates. Intermediate accounting has a reputation as the sequence that determines who continues in the major, and the third course is where that is decided.

Learning Outcomes

Required Outcomes

• Apply the conceptual framework of financial reporting to complex transactions.
• Locate and apply authoritative guidance in the FASB Accounting Standards Codification.
• Account for investments in debt securities and apply the appropriate classification and measurement.
• Account for investments in equity securities, including the equity method.
• Apply the five-step revenue recognition model to contracts with customers.
• Identify performance obligations and allocate transaction price appropriately.
• Account for revenue recognized over time and at a point in time.
• Account for contract costs, variable consideration, and contract modifications.
• Account for income taxes, including deferred tax assets and liabilities.
• Distinguish permanent from temporary differences and compute their effects.
• Apply valuation allowance considerations and account for net operating losses.
• Account for pensions and other postretirement benefits.
• Distinguish defined contribution from defined benefit plans and account for each.
• Account for share-based compensation.
• Account for leases from the lessee perspective, including finance and operating classification.
• Account for leases from the lessor perspective.
• Prepare a statement of cash flows using the indirect method.
• Prepare a statement of cash flows using the direct method.
• Analyze and classify complex items within operating, investing, and financing activities.
• Account for accounting changes and correct prior period errors.
• Prepare and evaluate financial statement disclosures.
• Analyze financial statements and interpret the effects of accounting choices.

Optional Outcomes

• Compare US GAAP with IFRS treatment of the topics covered.
• Describe earnings per share computation in complex capital structures.
• Describe derivatives and hedge accounting at an introductory level.
• Describe fair value measurement and its hierarchy.
• Describe the standard-setting process and current FASB projects.
• Research an accounting issue and document the conclusion.

Major Topics

Required Topics

• The conceptual framework applied to complex transactions
• Using the FASB Codification
• Investments in debt securities
• Investments in equity securities and the equity method
• The five-step revenue recognition model
• Performance obligations and transaction price allocation
• Over-time versus point-in-time recognition
• Contract costs, variable consideration, modifications
• Income taxes and deferred tax accounting
• Permanent and temporary differences
• Valuation allowances and net operating losses
• Pensions and postretirement benefits
• Defined contribution and defined benefit plans
• Share-based compensation
• Lessee lease accounting
• Lessor lease accounting
• Statement of cash flows: indirect method
• Statement of cash flows: direct method
• Classification of complex cash flow items
• Accounting changes and error correction
• Disclosure requirements
• Financial statement analysis

Optional Topics

• US GAAP versus IFRS
• Earnings per share in complex structures
• Derivatives and hedge accounting
• Fair value measurement
• Standard setting and current projects
• Accounting research and documentation

Resources & Tools

• Intermediate Accounting (Kieso, Weygandt & Warfield) — the dominant text; Spiceland is the common alternative. Use whichever your programme assigns and do the problems.
• FASB Accounting Standards Codification — the authoritative source. The Academic Accounting Access programme provides free or low-cost student access through participating institutions; ask your department, because learning to navigate the Codification is a genuinely employable skill.
• SEC EDGAR (sec.gov/edgar) — free, and every public company's actual financial statements and footnotes. Reading a real 10-K alongside the textbook is the single best way to make this material concrete.
• AICPA (aicpa.org) — free CPA examination blueprints; see the flag below on why to read them now.
• Florida Board of Accountancy (floridascpa.gov) — free Florida CPA licensure requirements under Chapter 473, Florida Statutes.
• Big Four and major firm technical guides — Deloitte's DART, PwC's Viewpoint, and EY's technical publications include substantial free material on revenue, leases, and income taxes that is clearer than most textbooks.
• FASB (fasb.org) — free standard summaries and the current technical agenda.
• Excel — deferred tax schedules, lease amortization tables, and cash flow worksheets are spreadsheet work; see this repository's ISM2000 guide.
• A study group. Intermediate accounting is learned by working problems and arguing about them.

Career Pathways

• Public accounting — audit and assurance, tax, and advisory; the Big Four and regional and local firms all recruit from intermediate accounting performance.
• Corporate and industry accounting — financial reporting, general ledger, and technical accounting roles.
• Financial reporting analyst — preparing the statements this course teaches you to construct.
• Internal audit — with the CIA credential available.
• Government and non-profit accounting — state, county, and municipal finance departments, with distinct standards.
• Tax accounting — the income tax content here is the foundation.
• Forensic accounting and fraud examination — error and irregularity analysis begins here.
• Financial analysis — understanding how the statements are built is what makes analysis credible.
• CPA — the credential; see the flag below on Florida's specific requirements.
• SOC codes 13-2011 Accountants and Auditors and 13-2051 Financial and Investment Analysts. Accounting employment is stable and geographically distributed; Florida has substantial demand across public practice and industry.

Special Information

⚠ The standards in this course were rewritten recently — and the textbook may lag

An unusual feature of this particular course, and it matters for both learning and the CPA examination.

Three of the largest topics here have been substantially revised in the last decade:

• Revenue recognition was replaced with a single, principles-based five-step model applying across industries, superseding a large body of industry-specific guidance. It changed the timing of revenue for many businesses and required extensive judgement about performance obligations and transaction price.
• Lease accounting was rewritten to bring most leases onto the balance sheet as right-of-use assets and lease liabilities, eliminating the off-balance-sheet operating lease treatment that had been a persistent analytical complaint.
• Credit losses moved to an expected-loss model, changing how receivables and debt securities are reserved.

The practical consequences for a student:

• Use current editions and current sources. An older textbook or an old set of study notes may teach superseded guidance, and the CPA examination tests current standards.
• Learn to read the Codification. The ability to find and apply authoritative guidance is more durable than memorizing any particular rule, and it is what the job actually requires.
• Principles-based standards require judgement. The five-step revenue model does not give an answer; it gives a framework within which you must decide. That is uncomfortable for students trained on rules with definite outcomes, and it is the point.
• Read real footnotes. SEC EDGAR is free, and a company's revenue recognition and lease footnotes show you how the standards are actually applied and disclosed.
• Rule 11 applies — FASB has an active agenda and standards continue to change. Verify against the current Codification.

⚠ Deferred taxes and the cash flow statement are where students lose marks

Practical guidance on the two topics that consistently cause the most difficulty.

Income tax accounting is conceptually hard because it requires holding two systems in mind at once — the financial accounting treatment and the tax treatment — and accounting for the difference:

• Get the permanent/temporary distinction absolutely solid. Permanent differences never reverse and do not create deferred taxes; temporary differences reverse and do. Almost every error traces back to misclassifying one.
• Work from the balance sheet. Deferred tax assets and liabilities arise from differences between book and tax bases; computing them from the balance sheet difference is more reliable than trying to track income statement effects.
• Draw the timeline. When does the difference arise, when does it reverse, and at what rate? Rate changes complicate this and are examinable.
• Valuation allowances require judgement about whether the deferred tax asset will be realized, which is a real-world estimate rather than a calculation.

The statement of cash flows is difficult for a different reason — it is a reconciliation, and errors anywhere propagate:

• Learn the indirect method mechanically first, then understand why each adjustment exists. Non-cash expenses added back, working capital changes, and gains and losses reversed out of operating and placed in the correct section.
• Classification is the examinable judgement. Interest paid, dividends received, and dividends paid have specific classifications, and non-cash investing and financing transactions are disclosed rather than presented.
• Check that it ties. The net change in cash must reconcile to the balance sheet. If it does not, something above is wrong — and finding it is the exercise.
• The direct method is required to be understood even though most companies use the indirect method, and examinations test both.

The study method that works for this course: work problems, do not read. Intermediate accounting rewards volume of practice more than almost any other business course, and students who study by rereading the chapter perform badly and are surprised.

⚠ Florida CPA licensure has specific requirements — and the education rules changed

Career planning information best acted on in the middle of the degree rather than at the end.

• Florida licenses CPAs under Chapter 473, Florida Statutes, through the Board of Accountancy within DBPR. Licensure requires education, examination, and experience.
• Florida has specific coursework requirements — defined minimum semester hours in accounting above the introductory level and in general business, with particular subject coverage. These are more prescriptive than a generic "150 hours" summary suggests, and students routinely discover a missing course late. Check the Board's requirements against your transcript now.
• The 150-hour education requirement has been the national standard for licensure, and several states — including Florida — have enacted or are considering alternative pathways combining a bachelor's degree with additional experience, in response to declining accounting enrolment. This area is actively changing.
• The CPA examination itself was restructured into a core-plus-discipline model, with three core sections and a chosen discipline section. Read the current AICPA blueprints rather than relying on descriptions of the old four-part exam.
• Intermediate accounting is the examination's backbone. The financial accounting and reporting content maps directly onto this sequence, which is why performance here predicts examination outcomes.
• Sit sections while the material is fresh. Candidates who begin soon after graduating pass at higher rates, and eligibility to sit may precede full licensure requirements.

Rule 11 applies with unusual force here. CPA education requirements, examination structure, and Florida's specific rules are all in flux. Verify with the Florida Board of Accountancy and the AICPA directly, and re-check before making plans that depend on them.

How Florida course levels affect transfer

The first digit of an SCNS number denotes the year of offering, not transferability. Courses at the 1000 and 2000 levels transfer transparently between Florida public institutions, and 3000 to 4000 is unproblematic since both are upper division. The boundary that actually matters is 2000 to 3000, where lower-division credit generally cannot satisfy an upper-division requirement.

ACG3123 is 3 credits and approximately 45 contact hours, offered fall and spring. Expect problem-intensive examinations and substantial homework; the sequence is cumulative, so material from ACG3101 and ACG3113 is assumed and used.

ACG3123 is upper division and the sequence must be taken in order. Students transferring from an A.A. arrive with junior standing under Florida's articulation agreement — but note that intermediate accounting sequences do not always align between institutions in how topics are distributed across the three courses, so transferring mid-sequence can leave gaps. Confirm topic coverage with the receiving institution, and confirm that both institutions' courses count toward the Florida Board's specific coursework requirements.