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Capital Expenditure Analysis: An Incident Process Case.

Earl A. Spiller
The Accounting Review 1981 56(1), 158-165
This paper describes an incident process case which has been used effectively as a teaching medium for a capital expenditure decision. Typically, capital budgeting problems require students only to classify data given to them as relevant or irrelevant and to manipulate data to reach an accept or reject decision. In the incident process case, however, students must (1) decide what information might be relevant, (2) present formal and informal requests to the instructor for specific data, and (3) develop these data into useful information. The decision context is the replacement of a company airplane. The case comes from a real-world situation, and the data set reflects current economic conditions. The problem encompasses relevant concepts of capital expenditure analysis and cost-volume-profit analysis. It also employs the distinction between investment and financing decisions. The unstructured setting and requirements require careful and creative thinking by students. The article contains a statement of the case, a basic data set, and a description of how the author conducts the case.

THEORY AND PRACTICE IN THE DEVELOPMENT OF ACCOUNTING.

Earl A. Spiller
The Accounting Review 1964 39(4), 850-859
In any attempt to investigate accounting in search of general principles, one is immediately impressed by the difficulty in determining exactly what accounting is. For anyone looking at accounting is confronted with two rather distinct well-springs of accounting thought. In one case accounting is a practical art attempting to record, classify, and summarize certain facts and events relating to business operations. On the other hand, accounting can be viewed as a theory of financial communication, founded on assumptions and containing logically derived and internally consistent conclusions. The fact is that there has actually been a dual or concurrent development in accounting. While accounting was developing as a practical art, it was also evolving a body of theoretical knowledge. The practical development can be traced back five hundred years, the theoretical evolution is of much more recent vintage. This paper will discuss the differences between the theoretical and practical development of accounting and why these differences exist.

TEACHING CONSOLIDATED INCOME STATEMENTS--A NEW APPROACH.

Earl A. Spiller
The Accounting Review 1962 37(2), 336-342
Accounting students, early in their careers learn to understand the relationship between the position statement and the income statement. In studying these consolidated financial statements, the student becomes overly involved in the details of elimination entries and worksheets with little real understanding of why the entries are being made. This article attempts to overcome some of these problems by using a slightly different approach to the teaching of the consolidated income statement. First, a change in the type of elimination entries normally made in consolidated income statements is introduced. Then elimination entries involving intercompany sales are simplified into four steps, each of which is explained very logically. It further illustrates some of the techniques found useful in teaching this new approach to elimination entries. These techniques involve the use of box diagrams and a modification in the work-sheet form. It follows that taking each statement separately minimizes the complications involved with elimination entries.