Download the full version of the ebook now at ebooksecure.

com

(eBook PDF) Advanced Accounting, Canadian

Edition, Updated Version

https://ebooksecure.com/product/ebook-pdf-
advanced-accounting-canadian-edition-updated-
version/

Explore and download more ebook at https://ebooksecure.com

 Recommended digital products (PDF, EPUB, MOBI) that
you can download immediately if you are interested.

(eBook PDF) Intermediate Accounting Volume 2, 7th Updated

Canadian Edition

https://ebooksecure.com/product/ebook-pdf-intermediate-accounting-
volume-2-7th-updated-canadian-edition/

ebooksecure.com

(eBook PDF) Intermediate Accounting Volume 1, 7th Updated

Canadian Edition

https://ebooksecure.com/product/ebook-pdf-intermediate-accounting-
volume-1-7th-updated-canadian-edition/

ebooksecure.com

(eBook PDF) Modern Advanced Accounting in Canada, 9th

Canadian Edition

https://ebooksecure.com/product/ebook-pdf-modern-advanced-accounting-
in-canada-9th-canadian-edition/

ebooksecure.com

(eBook PDF) Economics, Global Edition 2nd Edition by Daron

Acemoglu

https://ebooksecure.com/product/ebook-pdf-economics-global-
edition-2nd-edition-by-daron-acemoglu/

ebooksecure.com
Principles of auditing & other assurance services 20.
edition Edition Pany - eBook PDF

https://ebooksecure.com/download/principles-of-auditing-other-
assurance-services-ebook-pdf/

ebooksecure.com

(eBook PDF) Research Methods: The Essential Knowledge Base

2nd Edition

https://ebooksecure.com/product/ebook-pdf-research-methods-the-
essential-knowledge-base-2nd-edition/

ebooksecure.com

Psychology, Global Edition Sixth edition Saundra K.. White

Ciccarelli (J. Noland.) - eBook PDF

https://ebooksecure.com/download/psychology-global-edition-sixth-
edition-ebook-pdf/

ebooksecure.com

College Algebra Enhanced with Graphing Utilities 7th

Edition Sullivan - eBook PDF

https://ebooksecure.com/download/college-algebra-enhanced-with-
graphing-utilities-ebook-pdf/

ebooksecure.com

TEXTBOOK OF ORTHODONTICS 1ST EDITION - eBook PDF

https://ebooksecure.com/download/textbook-of-orthodontics-ebook-pdf/

ebooksecure.com
Financial Accounting 9th Edition (eBook PDF)

https://ebooksecure.com/product/financial-accounting-9th-edition-
ebook-pdf-2/

ebooksecure.com
Dedicated to my husband Michael

And my children

Erin & Dave

Joshua

Zachary
ABOUT THE AUTHORS

Gail Fayerman, MBA, CPA, CA, is a senior lecturer of accountancy at the John Molson
School of Business at Concordia University in Montreal. She has been teaching courses in
financial accounting for more than 25 years. She has taught at the undergraduate level, in
the Graduate Diploma in Accountancy, in the executive MBA program, and the Goodman
Institute MBA program. She was the Director of the Graduate Diploma Program, which
prepares students for the Uniform Final Exam for Chartered Accountancy, for nine years.
She chairs the department curriculum committee and is a member of the faculty curriculum
committee. She has been the recipient of the faculty “distinguished teacher” award in 1993
and 2001 and now sits as a member of the committee to select the recipient. She has been
an instructor for the continuing education program, teaching both IFRS and ASPE topics,
for the Ordre des comptables professionnels agréés du Québec (CPA) for many years and
recently began instructing for the Institute of Chartered Accountants of Ontario as well. She
is involved in the development of a new education program for the Canadian Association of
Insolvency and Restructuring Professionals (CAIRP).
Ken Leo, B.Com (Hons), MBA (Qld), AAUQ, ACA, FCPA is Professor of Accounting at
Curtin University of Technology, Western Australia. In over 30 years as an academic, Ken
has taught company accounting to undergraduate and postgraduate students. He was a found-
ing member of the Urgent Issues Group, and has written books and monographs for a variety
of organisations including CPA Australia, the Group of 100 and the Australian Accounting
Research Foundation. He was a founding member of the Urgent Issues Group, serving on
that body from 1995 to 2001. Ken also served on the Australian Accounting Standards Board
from 2002 to 2007, both as a member and as deputy chair of the Board.
John Hoggett, BCom (Hons), Hogett. BCorn (Hons), BTh, MFM, AAUQ, FCPA, worked
in universities in both Western Australia and Queensland for 35 years. During this time,
he taught introductory accounting, corporate accounting, and accounting theory to under-
graduate and postgraduate students. John has written books and monographs for a variety
of organisations including CPA Australia and the Group of 100, and has been involved in
secondary education with the Curriculum Council of Western Australia.
John Sweetinq , BEc, MEc, PhD, CPA, CA, is a Senior Lecturer in Accountancy at
Queensland University of Technology. John’s background includes a mixture of academic
and business positions. He has taught at Swinburne University of Technology and the
University of Central Queensland, and has spent time with the National Companies and
Securities Commission (now the Australian Securities and investments Commission). John
has also held positions with a large international chartered accounting firm and a large manu-
facturing/retailing company listed on the Australian Securities Exchange. He has written for
professional journals, and his main area of research is external reporting and profit fore-
casts in prospectuses. In addition to running in-house courses for accounting firms, John
has also conducted Professional Development courses for CPA Australia and The Institute
of Chartered Accountants in Australia. He has also been actively involved in both the CPA
Program and the CA Program.
Jennie Radford, BCom, DipEd, MCom, ACA, recently retired from the School of Accounting
at Curtin University of Technology, Western Australia. She co-authored two research mono-
graphs published by the Group of 100 and CPA Australia. She also co-authored and co-edited
several textbooks. Jennie was for many years employed as an auditor with ‘Big 5’ chartered
accounting firms. During her academic career, Jennie taught undergraduate and postgradu-
ate courses in financial accounting and corporate accounting. She is a member of the Western
Australia Cell of the External Reporting Centre of Excellence (with CPA Australia).

vi
PREFACE

INTRODUCTION
Advanced Accounting is designed to address those advanced topics in accounting that require
knowledge of all other sections of the CICA Handbook. This text builds on the knowledge
obtained in an intermediate accounting course and is intended to extend the learning from
intermediate texts such as Intermediate Accounting by Kieso, Weygandt, Warfield, Young, and
Wiecek. This book has been designed to carry forward many of the features of that interme-
diate text.
This textbook is separated into three modules:
Module 1 – Long-term inter-corporate investments
Module 2 – Foreign currency
Module 3 – Not-for-profit and government organizations reporting
These modules can be studied independently but can also be studied in an integrated
manner. Some schools examine each of these topics in one course, whereas others may sepa-
rate the modules in different courses. When creating the format of this text, we considered
the fact that the CICA Handbook – Accounting now encompasses four sections:
Part I – International Financial Reporting Standards (IFRS)
Part II – Accounting Standards for Private Enterprises (ASPE)
Part III – Accounting Standards for Not-for-Profit Organizations
Part IV – Accounting Standards for Pension Plans
Our emphasis in the book is on Part I of the Handbook since we believe that Part I encom-
passes the major issues; however, Part II is examined for each issue where the accounting and
reporting is different. We have included material and problems that can be examined under
IFRS or ASPE. We recognize that some audiences are more interested in IFRS, whereas oth-
ers need to understand ASPE. Part III is also addressed as a separate topic in Module 3. This
textbook does not cover Part IV of the handbook.
The material covered in this text can be very complex. This textbook takes a detailed
approach to each of the topics. All aspects are examined and are separated by learning objec-
tives so that instructors can decide the level of depth they wish to cover. Links are made
throughout to the specific Handbook sections as we feel that at this level, students should
become familiar with the actual Handbook material. To help students understand the com-
plexities of these topics, all concepts are illustrated with examples and each chapter has sum-
mary illustrative examples with solutions so that students can see how these concepts are
applied.

vii
viii Preface

FEATURES OF THIS EDITION

Chapter-opening stories: Given the complexity of the material, students can often get
bogged down in the technical material. It is important for them to understand the real-world
association. As such, we have included a real-life story at the beginning of each chapter that
illustrates the material they are going to examine in the chapter.
Illustrative examples: Every major topic is followed up with at least one illustrative example
to reinforce the material. The material is complex and many students will benefit from seeing
the problem solved before attempting the end-of-chapter problems themselves.
ASPE boxes: These boxes highlight all areas where the standards are different than IFRS.
They are sufficiently detailed and include examples where necessary so that students can fully
ASPE understand how to account for and report a transaction using ASPE. There are some signifi-
cant areas in the material covered in this text that warrant a detailed treatment under ASPE.
Learning check boxes: Each learning objective is summarized in a learning check box to
reinforce the concept that has just been examined. The points in the learning check box are
sufficiently detailed to act as a good review but not detailed enough to be understood unless
students have covered the material in the learning objective.
Demonstration problems: The end of each chapter (with the exception of Chapter 1) has at
least one comprehensive problem that incorporates all the learning objectives in the chapter.
This is an extension of the illustrative problems and is particularly important as the integra-
tion of material becomes more extensive. Students can follow the demonstration as a meth-
odology to solve problems on their own.
End-of-chapter material: At the end of each chapter are different types of problems
intended to reinforce various aspects of learning. A selected number of these questions from
each chapter are programmed into the WileyPLUS course to allow for online assessment.

Brief exercises help students recap the key points in the chapter and are useful for review.
Exercises are more expanded exercises generally covering fewer learning objectives so that
students can practise a particular concept.
Problems generally cover more than one learning objective and require students to integrate
knowledge within the chapter and from previous chapters.
Writing assignments are generally shorter cases that require students to explain concepts that
they have learned in a particular application.
Cases of several types are presented so students can apply the knowledge they have obtained.
The case scenarios place students in the situation of having to solve an issue. Some cases deal
only with material from the chapter, some may incorporate material from other chapters, and
others may integrate material from courses that students have previously taken. A brief ver-
sion of our Case Primer appears on the inside front cover of this text; it is designed to provide
students with a framework for case analysis.
 Preface ix

CHAPTER-BY-CHAPTER OVERVIEW
Module 1 – Long-Term Inter-Corporate Investments
This module examines the topic of long-term inter-corporate investments. The text
emphasizes the CICA Handbook, Part I (IFRS), but based on the fact that many Canadian
companies follow Part II (ASPE), each chapter includes the methodology under ASPE.
The chapters are configured to lead students through the process of a company acquiring
an investment.
Chapter 1 – Accounting for Investments introduces students to the different types of
investments and the basics of the reporting for each of them. The primary emphasis in this
chapter is the identification of the nature of the investment. ASPE is explored in this area as
there are significant differences.
Chapter 2 – Business Combinations narrows in on the investments in which an entity
gains control. The acquisition of net assets is explored with the emphasis on determining the
correct fair values and goodwill on acquisition. The chapter presents an in-depth discussion
that represents a realistic scenario that students may encounter. Different types of identifi-
able intangibles are examined and the tax effect is introduced.
Chapter 3 – Consolidation: Wholly Owned Subsidiaries continues with the investments
in which an entity gains control but deals with the accounting and reporting when shares are
acquired. We assume that the entity acquires 100% of the shares. This chapter introduces
the consolidation process. We begin with consolidation at the day of acquisition and then
look at consolidation in subsequent periods. Students focus on what happens to the fair value
adjustments.
Chapter 4 – Consolidation: Intragroup Transactions introduces intragroup transactions
and unrealized profits. We address all types of profits: inventory, land, depreciable assets, and
intangible assets. In addition we look at intragroup transactions with advances and loans. We
continue to assume that the entity owns 100% of the shares.
Chapter 5 – Consolidation: Non-controlling Interest deals with control investments
that are less than 100% owned. As such, we introduce the nature of non-controlling inter-
est, the calculation of the non-controlling interest share of net income and net assets, and
the implication on intragroup transactions and unrealized profits. Under IFRS and ASPE,
consolidated net income is shown and then allocated between the parent and the non-
controlling interest. The previous chapter completed the calculation of the consolidated
net income and this chapter deals with the allocation of this net income and consequently
the net assets.
Chapter 6 – Accounting for Investments in Associates and Joint Ventures revisits the
accounting for associates and joint ventures and focuses on the equity method, including
intragroup transactions and fair value adjustments. The distinction is made between the
reporting on non-consolidated statements and consolidated financial statements.

Module 2 – Foreign Currency

This module addresses all accounting and reporting issues as a result of an entity transacting
in a foreign currency. The discussion is based on IFRS and focuses on the functional cur-
rency, although ASPE is covered where the requirements are different.
Chapter 7 – Accounting for Foreign Currency introduces the concept of foreign cur-
rency risk and discusses how to determine the functional currency of an entity and its pre-
sentation currency. We examine the accounting for transactions in a foreign currency and
address hedging of foreign currency risk. ASPE is addressed for hedging as the rules are not
the same.
x Preface

Chapter 8 – Accounting for Foreign Investments addresses the translation of a group of

entities. We assess the functional currency for each entity in the group, translate the state-
ments into the respective functional currencies, and prepare the consolidated financial state-
ments in the presentation currency. ASPE is addressed since the process of determining the
type of investment (self-sustaining versus integrated) is not the same as IFRS.

Module 3 – Not-for-Profit and Government

Organizations Reporting
This module examines the accounting for not-for-profit or public sector entities that do not
follow Part I (IFRS) of the CICA Handbook.
Chapter 9 – Reporting for Not-for-Profit Organizations examines the accounting and
reporting for private not-for-profit organizations. In this chapter we review the specific
accounting and reporting as required under Part III of the CICA Handbook.
Chapter 10 – Reporting for Public Sector Entities examines the specific requirements of
government-controlled entities. We examine the issues that are unique to the government
sector, referencing the CICA Public Sector Accounting Handbook.

ADDITIONAL RESOURCES
The following additional resources are available to instructors via our instructors’ companion
site, which can be found at www.wiley.com/go/fayermancanada
• Solutions Manual contains worked out solutions for all end-of-chapter question material.
• Test Bank Available in both computerized and Word document formats, this test bank
offers multiple choice, true/false, short answer, and problem questions.
• PowerPoint® Presentation Slides present the major concepts from each chapter.

WileyPLUS is an innovative, research-based online environment for effective teaching and

learning.
WileyPLUS builds students’ confidence because it takes the guesswork out of studying by
providing students with a clear roadmap: what to do, how to do it, if they did it right. This
interactive approach focuses on:
CONFIDENCE: Research shows that students experience a great deal of anxiety over
studying. That’s why we provide a structured learning environment that helps students focus
on what to do, along with the support of immediate resources.
MOTIVATION: To increase and sustain motivation throughout the semester, WileyPLUS
helps students learn how to do it at a pace that’s right for them. Our integrated resources
– available 24/7 – function like a personal tutor, directly addressing each student’s demon-
strated needs with specific problem-solving techniques.
SUCCESS: WileyPLUS helps to assure that each study session has a positive outcome by
putting students in control. Through instant feedback and study objective reports, students
know if they did it right, and where to focus next, so they achieve the strongest results.
With WileyPLUS, our efficacy research shows that students improve their outcomes by
as much as one letter grade. WileyPLUS helps students take more initiative, so you’ll have
greater impact on their achievement in the classroom and beyond.
What do students receive with WileyPLUS?
 Preface xi

• The complete digital textbook, saving students up to 60% off the cost of a printed text.
• Question assistance, including links to relevant sections in the online digital textbook.
• Immediate feedback and proof of progress, 24/7.
• Practice quizzes designed to provide students with further practice for problem areas.
What do instructors receive with WileyPLUS?
• Reliable resources that reinforce course goals inside and outside of the classroom.
• The ability to easily identify those students who are falling behind.
• Media-rich course materials and assessment content including—Test Bank, PowerPoint®
Slides, Learning Objectives, Solutions Manual, Checklist of Key Figures, Computerized
Test Bank, and much more
www.wileyplus.com. Learn More.

ACKNOWLEDGEMENTS
Special thanks are extended to reviewers whose contributions helped to shape the text:

George Anton, Seneca College Fred Pries, University of Guelph

Walt Burton, Okanagan College Eckhard Schumann, University of Toronto
Chuck Campbell, University of British Julia Scott, McGill University
Columbia Peter Secord, Saint Mary’s University
Wendy Doyle, Mount Saint Vincent University Glen Stanger, Douglas College
Maureen Fizzell, Simon Fraser University Deirdre Taylor, Ryerson University
Allan Foerster, Wilfrid Laurier University Kevin Jason Veenstra, University of Toronto
Heather Gillander, Brandon University Tony Vogrincic, Northern Alberta Institute of
Derrick Hayes, Cape Breton University Technology
Paul Hurley, Durham College Michael Qiao, George Brown College
Stuart Jones, University of Calgary Bill Waterman, Mount Allison University
Camillo Lento, Lakehead University Barbara Wyntjes, Kwantlen Polytechnic
Valorie Leonard, Laurentian University University
Jamal Nazari, Mount Royal University

In addition, thank you to the following contributors for preparing the ancillaries to the
book and for their useful suggestions and comments:

Stephen Bergstrom, SAIT Robert Ducharme, University of Waterloo

Vanessa Campbell Richard Michalski, McMaster University
Patricia Corkum, Acadia University Peter Doyle, Seneca College

In embarking on this project, my hope was to create a textbook that would make it easier
to master this complex material. Along the way I hope that students will appreciate the rel-
evance of the material and its importance in the business world. This project is not one that
I could have accomplished on my own. I would like to thank the following individuals who
contributed to the text.
I am grateful to Jo-Ann Lempert, CPA, CA, a partner with MNP LLP, for her help in
the area of foreign currency. In addition, there were many new issues that I was fortunate to
be able to discuss with her. I would like to thank Robert Correll, CA, for his expertise and
help in the accounting for government entities.
Creating the end-of-chapter material and providing solutions was an interesting challenge
in a first edition of a text. A lot of effort was needed to create, adjust, and correct the materials
xii Preface

and solutions. I would like to thank Vanessa Campbell, CPA, CA, for her diligent and
conscientious effort in preparing many of the end-of-chapter materials and for creating the solu-
tions manual to accompany the text. I would also like to acknowledge the efforts of Stephen
Bergstrom and Robert Ducharme who carefully checked the accuracy of these solutions.
I would like to acknowledge my three former students who were so keen to participate
in a textbook project.
Audrey Landry, CPA, CA, KPMG, for her research help and for writing many of the
chapter-opening stories; June Svetlovsky, CPA, CA, KPMG, for her research help; and
Patrick Gagnon, CPA, CA, Manager of Corporate Consolidations at Aimia Inc., for his help
in writing many of the chapter-opening stories.
I am grateful that I had the opportunity to write a textbook based on my experience
teaching this course for more than 25 years. It was nevertheless a daunting a task. This proj-
ect has been a fantastic experience due to the great support from the individuals at John
Wiley & Sons Canada, Ltd. I would particularly like to thank:
Zoë Craig, for approaching me initially and always making it seem that we were having fun.
Andrea Grzybowski, for keeping me and everyone else on track and always doing it in a
positive way.
Laurel Hyatt, for showing me her amazing skill at editing. I am convinced that she is an
accountant in real life.
I would also like to acknowledge Emma Cole, who did an amazing proofreading job, and
Belle Wong, who was the indexer for the project.
I would like to thank my husband, Michael Campbell, who thought this project was a
great idea and who promised to sing on the book tour, and my wonderful children, Erin and
Dave, Joshua, and Zachary, who promised to read the textbook now. Finally, I want to extend
my appreciation to all of my students, past, present, and future. I think I learn as much from
you as I hope you learn from me.

Gail Fayerman
Montreal, August 2012
BRIEF CONTENTS

Module 1 Long-Term Inter-Corporate Investments 1

1 Accounting for Investments 2

2 Business Combinations 46
3 Consolidation: Wholly Owned Subsidiaries 106
4 Consolidation: Intragroup Transactions 160
5 Consolidation: Non-controlling Interest 220
6 Accounting for Investments in Associates and Joint Ventures 284

Module 2 Foreign Currency 341

7 Accounting for Foreign Currency 342

8 Accounting for Foreign Investments 398

Module 3 Not-for-Profit and Government Organizations

Reporting 449

9 Reporting for Not-for-Profit Organizations 450

10 Reporting for Public Sector Entities 508

Appendix: Present Value Tables 552

Glossary 554

Credits 557

Company Index 558

Subject Index 559

xiii
Visit https://testbankfan.com
now to explore a rich
collection of testbank or
solution manual and enjoy
exciting offers!
This page is intentionally left blank
 CONTENTS

Module 1 Long-Term Inter-Corporate Equity Instruments 58

Liabilities Undertaken 59
Investments 1
Costs of Issuing Debt and Equity
1 Accounting for Investments 2 Instruments 59
Non-strategic Investments in Equity 5 Contingent Consideration 59
Identifying Non-strategic Investments Acquisition-Related Costs 59
in Equity 5 Recognizing and Measuring Assets
Criteria 5 Acquired and Liabilities Assumed 62
Initial Recognition 6 Recognition 62
Recording Non-strategic Equity Investments 8 Income Taxes 65
Recognizing and Measuring Goodwill or
Strategic Investments—Parent–Subsidiary a Gain from a Bargain Purchase 66
Relationship 12 Definition of Goodwill 66
Identifying Parent–Subsidiary Relationships 12 Accounting for Goodwill 67
The Power Criterion 13 Accounting for a Gain on Bargain Purchase 68
The Returns Criterion 18 Shares Acquired in an Acquiree 69
The Link Criterion 18 Existence of a Previously Held Equity
Summary of Process to Determine Control 20 Interest 70
Presentation of Consolidated Financial
Accounting in the Records of the
Statements for Controlled Entities 21
Acquiree 72
Strategic Investments—Associates 26 Purchase of Acquiree’s Assets and
Identifying Associates 26 Liabilities 72
Significant Influence 26 Purchase of Acquiree’s Shares from the
Exclusions to the Definition of Associate 27 Shareholders 72
Equity Method of Accounting 28
Rationale 28 Subsequent Adjustments to the Initial
Applying the Equity Method: Basic Method 29 Accounting for a Business Combination 73
Goodwill 73
Strategic Investments—Joint Arrangements 32 Contingent Liabilities 74
Identifying Joint Arrangements 32 Contingent Consideration 74
Joint Operations 32
Joint Ventures 33 Learning Summary 79
Accounting and Reporting for Joint Demonstration Problems 79
Arrangements 33
Joint Operations 33 3 Consolidation: Wholly Owned
Joint Ventures 33 Subsidiaries 106
Learning Summary 35 The Consolidation Process 108
The Acquisition Date 109
2 Business Combinations 46 Preparing Consolidated Financial
Nature of a Business Combination 49 Statements 111
Definition of Business Combination 49 The Acquisition Analysis 112
Forms of Business Combinations 51 Previously Held Equity Interest in the
Accounting for a Business Combination: Subsidiary 116
Basic Principles 52 Fair Value Adjustments 117
Identifying the Acquirer 53 Pre-acquisition Adjustments 118
Determining the Acquisition Date 55 Consolidated Financial Statements at
Accounting in the Records of the Acquirer 57 the Day of Acquisition 119
Consideration Transferred to the Acquiree 57 Basic Format 119
Cash or Other Monetary Assets 57 Goodwill Recorded by Subsidiary at
Non-monetary Assets 58 Acquisition Date 119
xv
xvi Contents

Dividends Recorded by Subsidiary at Realization of Profits or Losses on Depreciable

Acquisition Date 120 Asset Transfers 175
Gain on Bargain Purchase 121 Depreciation 176
Consolidated Financial Statements Adjustments for Transfers of Property,
Plant, and Equipment 177
Subsequent to the Acquisition Date 122
Parent Company Recording in its Intragroup Services 179
Own Books 122 Example 4.7: Intragroup Services 179
Cost Method 123 Example 4.8: Intragroup Rent 179
Equity Method 123 Realization of Profits or Losses 179
Fair Value Adjustments 124 Intragroup Dividends 180
1: Land 125 Dividends Declared in the Current
2: Equipment 126 Period but Not Paid 180
3: Inventory 128 Dividends Declared and Paid in the
4: Patent 129 Current Period 181
5: Bonds Payable 130 Tax Effect of Dividends 181
6: Liability—Provision for Loan Adjustments for Intragroup Dividends 181
Guarantee 131
7: Goodwill 132
Intragroup Borrowings 182
Advances 182
Preparation of Consolidated Financial
Example 4.9: Intragroup Advances
Statements in Subsequent Periods 133
with Interest 182
Learning Summary 137 Bonds 183
Demonstration Problems 138 Example 4.10: Bonds Acquired at
Date of Issue 183
4 Consolidation: Intragroup Learning Summary 184
Transactions 160
Appendix 4A Bonds Acquired on the
Adjusting for Intragroup Transactions: Open Market 186
Principles 162
Rationale for Adjusting for Intragroup
Transactions 162 5 Consolidation: Non-controlling
Income Tax Effects 163 Interest 220
Transfers of Inventory 164 The Nature of Non-controlling
Sales of Inventory 164 Interest (NCI) 222
Example 4.1: Intracompany Sale Determination of the NCI 222
of Inventory 164 Disclosure of the NCI 222
Realization of Revenues and Expenses 165 Non-controlling Share of Equity at the
Unrealized Profits in Ending Inventory 165 Acquisition Date 225
Example 4.2: Transferred Inventory Full Goodwill Method 226
Still on Hand 165 Partial Goodwill Method 227
Example 4.3: Transferred Inventories Reasons for Choosing Method 228
Partly Sold 167 Accounting at the Acquisition Date 229
Example 4.4: Transferred Inventory
Non-controlling Interest in Income
Completely Sold 168
Unrealized Profits in Beginning Inventory 169
and Equity in Subsequent Periods 234
Example 4.5: Transferred Inventory on Non-controlling Interest Affected by
Hand at the Beginning of the Period 169 Intragroup Profit 239
Adjustments for Transfers of Inventory 170 Inventory 240
Depreciable Non-current Assets 240
Intragroup Profits and Losses on
Intragroup Transfers for Services and
Transfers of Property, Plant, and
Interest 241
Equipment 172
Sale of Land 172 Non-controlling Interest Affected by a
Example 4.6: Transfer in Current Year 172 Gain on Bargain Purchase 243
Sales of Depreciable Assets 173 Changes in the Proportion Held by
Example 4.7: Transfer in Current Year 173 Non-controlling Interest 244
Depreciation and Realization of Profits Increases in Ownership 245
or Losses 175 Decreases in Ownership 245
 Contents xvii

Decrease in Ownership Due to a Sale Losses Recorded by the Associate or

by Parent 246 Joint Venture 312
Subsidiary issues additional shares to
Learning Summary 314
non-controlling interest 246
Learning Summary 247 Demonstration Problems 314
Appendix 5A Concepts of Consolidation 248 Module 2 Foreign Currency 341
Entity Concept of Consolidation 248
Parent Entity Concept of Consolidation 249 7 Accounting for Foreign Currency 342
Proprietary Concept of Consolidation 250 Determining the Functional Currency
Choice of Concept 251 of a Company 345
Foreign Currency Risk 345
6 Accounting for Investments in Foreign Currency Exchange Gains
Associates and Joint Ventures 286 and Losses 346
The Equity Method of Accounting on Primary Economic Activity 347
Consolidated and Separate Financial Converting Foreign Currency
Statements 287 Transactions into a Company’s
Separate Financial Statements Versus Functional Currency 349
Consolidated Financial Statements 287 Initial Recognition 349
A Company Has an Investment in a Recognition in Subsequent Periods 350
Subsidiary Only 288 Monetary Items 351
A Company Has an Investment in an Non-monetary Items 354
Associate or a Joint Venture but Does
Not Have an Investment in a Subsidiary 288 Applying Hedge Accounting to Foreign
A Company Has an Investment in a Currency Transactions 358
Subsidiary and an Investment in an Economically Hedging Foreign
Associate or Joint Venture 288 Currency Risk 359
Applying the Equity Method: Basic Derivative Financial Instruments as
Method 289 Hedges 359
Speculating in Foreign Currency Financial
Goodwill and Fair Value Differences Instruments 359
at Acquisition Date 292 Hedging with Financial Instrument
Movements in Equity 295 Derivatives 360
Dividends 295 Definition of Hedge Accounting 363
Common Shares 295 Qualifying for Hedge Accounting 364
Preferred Shares 295 Applying Hedge Accounting 366
Reserves 296 Translating Financial Statements
Dissimilar Accounting Policies 296 from the Functional Currency to the
Different Ends of Reporting Periods 296
Presentation Currency 375
Investing in an Associate or Joint Choosing the Presentation Currency 375
Venture in Stages 300 Translating Financial Statements into a
Becoming an Associate or Joint Venture Presentation Currency 376
After Acquiring an Ownership Interest 301 Learning Summary 379
Increasing Ownership when Significant
Influence or Joint Control Already 8 Accounting for Foreign
Exists and Continues to Exist 303 Investments 398
Effects of Intercompany Transactions 304 Determining the Functional Currency
Transactions Between the Company and for Each Company in a Group 402
its Associate or Between the Company Definition of a Functional Currency 402
and its Joint Venture 304 Hierarchy of Criteria 402
Transactions Involving Inventory 305
Transactions Involving Non-current Assets 307 Determining the Foreign Currency
Transactions Involving Borrowings 308 Transactions Within the Group 405
Contributions of Nonmonetary Assets in Foreign Currency Transactions 405
Exchange for Equity Interests 309 Changes in Functional Currency 406
Transactions Between Associates or Joint Translating Individual Financial Statements
Ventures 310 into a Group Presentation Currency 407
xviii Contents

Presentation Currency Differing from the Specific Not-for-Profit Transactions 471

Functional Currency 408 Inventories Held by Not-for-Profit
Using a Currency of Convenience for Organizations 471
Translation 410 Recognition of Contributed Inventory 471
Preparing Foreign Currency Adjustments Inventories to Be Distributed at
for Consolidation or the Equity Method 411 No Charge 472
Intracompany Balances 412 Tangible Capital Assets and Intangible
Fair Value Adjustments 415 Assets Held by Not-for-Profit
Goodwill 415 Organizations 472
Fair Value Adjustments that Have a Exemption from Capitalization 473
Limited Life: Property, Plant, and Impairment 473
Equipment 416 Collections 474
Non-controlling Interest 417 Strategic Investments Held by Not-for-
Tax Effects of All Exchange Differences 418 Profit Organizations 475
Disposal or Partial Disposal of a Foreign Control 476
Operation 418 Significant Influence 477
Hedge Accounting 418 Presentation 477
Related-Party Transactions 478
Learning Summary 419 Allocated Expenses by Not-for-Profit
Appendix 8A—Hyperinflationary Organizations 479
Environment 421 Learning Summary 489
Appendix 9A—Budgeting In a
Module 3 Not-for-Profit and Not-For-Profit Organization 490
Government
Organizations Reporting 449 10 Reporting for Public Sector
9 Reporting for Not-for-Profit Entities 508
Organizations 450 The Reporting Framework for Public
Sector Entities 510
Reporting for Not-for-Profit
The Public Sector in Canada 510
Organizations 453 The Need for a Public Sector Accounting
Definition of a Not-for-Profit Framework 511
Organization 453 CICA PSA Handbook: A Primary Source
Objectives of Financial Reporting for a of GAAP 511
Not-for-Profit Organization 454 Key Characteristics of Public Sector
User Needs 454 Entities 512
Accounting Rules 455 Public Accountability 512
Financial Statements Required of a Multiple Objectives 512
Not-for-Profit Organization 456 Rights, Powers, and Responsibilities
Statement of Financial Position 456 (Constitutional or Devolved) 512
Statement of Operations 456 Lack of Equity Ownership 513
Statement of Changes in Net Assets 457 Operating and Financial Frameworks
Statement of Cash Flows 457 Set by Legislation 513
Fund Accounting 459 The Importance of the Budget 513
Description of Fund Accounting 459 Governance Structures 513
Types of Funds 460 Nature of Resources 513
Restricted Fund 460 Non-exchange Transactions 513
Endowment Fund 460 Public Sector Financial Reporting
Capital Asset Fund 461
Concepts 514
Illustration of Fund Accounting 461
Objectives of Public Sector Financial
Recording Contributions 464 Reporting 514
Definition of Contributions 464 Qualitative Characteristics of Public
Deferral Method of Fund Accounting 465 Sector Financial Reporting 515
Restricted Fund Method of Fund Elements of a Public Sector Financial
Accounting 467 Statement 517
Exploring the Variety of Random
Documents with Different Content
openings of the trachea and gullet (Fig. 33). Into this hinder chamber
open the posterior nares, so that the animal can open its mouth
under water without getting water into its trachea; or it may, while
holding its prey in its mouth, come to the surface to breathe, without
danger of letting water into its trachea. The nasal passages, leading
from the nostrils to the posterior nares, are, of course, completely
inclosed by bone, as described in connection with the skull. Ventral
to the larynx and posterior part of the mouth is the large, shield-
shaped hyoid apparatus, Fig. 25, h, also described in connection
with the skull.

The Œsophagus
The œsophagus, Fig. 34, e, is long and of about the same
diameter throughout except possibly for a slight enlargement of the
anterior region where it leaves the pharynx. The two “olivary
enlargements” mentioned by Chaffanjon (15) are not always present,
and when seen were found to contain either food or small stones or
both.
The outside of the œsophagus is smooth and muscular while the
lining is thrown into numerous longitudinal folds that in the empty
œsophagus nearly obliterate the lumen; where distended by food or
pebbles the longitudinal folds may be almost obliterated. In a thirty-
inch animal the œsophagus is about six inches long, and opens
suddenly, but without any apparent valve, into the large chamber of
the stomach. The histology of the œsophagus and the other regions
of the digestive tract will be described later.
 Fig. 34. Digestive System of A. Mississippiensis.
bd, bile duct; bs, bile sac; c, cloaca; e, œsophagus; f, larger or fundic region of
stomach; h, hyoid apparatus; l, liver; p, smaller or pyloric region of the
stomach; pa, pancreas; r, rectum; s, small intestine; t, tongue; tr, trachea.

The Stomach
The stomach, as is well known, is made up of two distinct parts;
that on the animal’s left, into which the œsophagus opens, is many
times larger than the part from which the small intestine leads. The
larger or fundic region, Fig. 34, f, has, as will be described, very
heavy muscular walls. When empty the lining of this part of the
stomach is thrown into a few comparatively large folds, but when
greatly distended with food, as it sometimes is, the internal folds are
completely obliterated and the muscular layers are stretched until
they have scarcely an eighth of their original thickness. In Figure 34
the stomach is considerably distended.
The large region of the stomach frequently contains a number of
stones, and for that reason, probably, is sometimes spoken of as the
gizzard. In one thirty-inch alligator fourteen pebbles of irregular
shape, varying in largest diameter from four to seventeen mm. and
aggregating six grams in weight, were found. Voeltzkow (78) says
that gastroliths of two to three cm. diameter are found in the stomach
of the adult Madagascar crocodile.
Neither the transverse fold nor the smooth, lateral disks (or
shields) described by Chaffanjon could be seen in either the empty
or in the distended stomach.
The smaller part of the stomach, Fig. 34, p, lies to the right and
somewhat ventrad to the anterior region of the larger part, near the
entrance to the œsophagus. It connects by a fairly large opening
with the larger part of the stomach, and by a smaller opening with
the duodenum. The former opening apparently has no valve, unless
it be a slight sphincter muscle; the latter is guarded by a pair of
thickened lips, called by Chaffanjon “semilunar valves.”
The walls of the smaller part of the stomach are, as might be
expected, much thinner than those of the larger region, but they are
proportionately fairly thick and are internally thrown into numerous
folds.

The Intestine
In the intestine three regions may be distinguished: a long,
considerably coiled small intestine; a wide, nearly straight rectum;
and a short, wide cloaca.
The small intestine, Fig. 34, s, is of moderate and rather uniform
diameter, though somewhat thicker near the stomach, and is not
coiled so extensively as figured by Chaffanjon. Near the stomach it
receives the ducts of the liver and pancreas. The bile duct, Fig. 34,
bd, is a continuation of an elongated bile sac, bs, which lies between
the large right and smaller left lobes of the liver, l. The two main
lobes of the liver, which appear smaller than in reality because of
foreshortening in drawing, are connected, across the base of the
œsophagus, by a narrow transverse band.
The pancreas, pa, which is of fair size, lies partly dorsal to and
partly in a narrow loop of the intestine, so that it is not very evident in
a ventral view of the animal.
The small intestine has heavy muscular walls whose histological
structure will be described elsewhere. It opens abruptly, without any
indication of a cæcum, into the large intestine or rectum.
The rectum, r, is of about twice the diameter of the small intestine,
though this, of course, varies with the amount of fecal matter it
contains; it is nearly straight and possesses much thinner walls than
the small intestine, though this, again, varies with the state of
collapse or distention.
At the posterior end of the rectum is a heavy sphincter valve
separating that part of the intestine from the cloaca.
The cloaca, c, is widest anteriorly where it is about as wide as the
rectum; it gradually diminishes in diameter caudad, and appears
flattened laterally. Its wall has the same general structure as the
rectum, as will be described below. The mucous membrane posterior
to the openings of the genital ducts is thrown into a more or less
complete, ring-like transverse fold (Fig. 55 g.). In some species there
may be a second, half-ring-like fold in the dorsal wall caudad to the
more complete ring. The cloaca is divided by this fold into a larger
anterior portion, g, and a shorter posterior portion, h; in the former
the mucous membrane is thrown into a large number of small folds
that in places form a network; in the latter the mucous membrane
has a hard, thick epithelium, with a smooth surface and only a few
longitudinal folds.
The ureters open, Fig. 55, d, e, at a moderate distance from each
other, into the anterior region of the cloaca (about where the dorsal
and lateral walls of this region come together). The genital ducts
(oviducts or vasa deferentia), c, f, on the other hand, open close
together through the ventral wall of the posterior half of the cloaca,
just in front of the copulatory organ.
Into the cloaca, very near the anus, open two glands of fairly large
size that Rathke called musk glands. These glands lie outside of the
pelvis between the side walls of the cloaca and a large muscle that
surrounds this part of the body. They have an oval form and open
usually from their anterior end, sometimes just caudad to this, by a
short, fairly wide, slit-like opening which has an anteroposterior
direction. The walls of the glands are made up of three closely
associated layers of connective tissue, the inner one being thrown
into folds. Since these layers contain no muscle fibers the secretion
of the gland is probably squeezed out by contraction of the circular
muscles of the cloaca. Usually the cloacal glands are stretched full
by a thick, yellowish mass that smells strongly of musk.
The part of the cloaca caudad to the pelvic opening has a
differently arranged musculature from the more anterior region. It
consists of two separate pairs of striped muscles that surround the
musk glands on the outer side. The first pair form a fairly broad,
moderately thick ring muscle next to the anus that is attached
anteriorly to the pubis and posteriorly to the second hæmal process.
When these muscles draw together they narrow or completely close
the anal slit. The muscles of the other pair are broader but thinner,
and extend in a general dorso-ventral direction. Anteriorly, above the
cloaca, they are united with each other, but posteriorly they separate
and, with the above ring muscle, are inserted on the second hæmal
arch. Judging from their attachment they widen the anal opening
laterally.

The Histology of the Enteron of the Florida

Alligator
It has long been known that the sea lamprey, Petromyzon
marinus, during the spawning season, when the body is distended
with eggs, takes no food, and that the digestive tract during this
period shrivels up until it is reduced to a mere thread. This condition
doubtless obtains in other forms as well, though it has not been
actually observed by the writer elsewhere.
A number of small alligators that were kept alive in the laboratory
for a year or more caused the writer to wonder whether any very
marked change had taken place in their digestive tracts during the
months they took no food.
In captivity, especially if the water in their tank be kept cold,
alligators may refuse food for five or sixth months. Whether, during
the winter months, in their native haunts, they entirely cease feeding,
the writer has had no opportunity to observe, though it is popularly
reported that such is the case.
The first alligator from which tissues were taken was about a year
and a half old, and measured eighteen inches in length. It was killed
in March after a fast of several months, probably four or five,
possibly more, though it was not in the writer’s possession for so
long a time.
 Fig. 35. Outline of Digestive Tract
Fig. 35. A diagrammatic outline of the digestive tract of the alligator from the
beginning of the œsophagus to the cloaca, to show the planes of the sections
that were studied, a.oes., anterior œsophagus; a.r., anterior rectum; a.s.i.,
anterior small intestine; c.st., cardiac stomach; f.st., fundic stomach; m.s.i.,
middle small intestine; p.oes., posterior œsophagus; p.r., posterior rectum or
cloaca; p.s.i., posterior small intestine; p.st., pyloric stomach.

Although carefully fixed in the usual fluids, the epithelial structures

from this animal were not as clearly defined in most cases as could
be desired; this rather unsatisfactory fixation may have been due to
some physiological condition characteristic of the period of
hibernation. That this was the case seems likely from the better
fixation obtained by the same methods in the case of animals killed
during the feeding season.
The other animals from which tissues were taken were
considerably smaller than the one mentioned above. They were
killed early in the fall, after having been fed regularly for about five
months upon bits of meat, both raw and cooked.
The Tongue. The covering of the tongue was studied in two
regions, near the free end, and towards the base.
A section of the former region, drawn under high power, is shown
in Figure 36. It consists of a dense mass of fibrous tissue, a, and
small scattered cells, overlaid by a stratified epithelium of eight or ten
layers. Only a small part of the fibrous base, just beneath the
epithelium, is here shown. It is a dense areolar tissue with the elastic
fibers apparently predominating.
The epithelium, e, consists, as has just been said, of about eight
or ten layers of cells, those at the base being generally cuboidal in
shape, while towards the surface the cells become more and more
flattened until at the surface they form a thick horny layer, h, in which
no nuclei can be seen. The cells of the horny layer are flattened into
mere fibers, which, at places, are seen projecting from the surface.
The boundary between the horny cells and those beneath is quite
distinct, though perhaps not quite so sharp as shown in the figure
under discussion.
 Fig. 36. The covering of the anterior region of the tongue of the hibernating
animal, under fairly high magnification; the plane of this section is not shown in
Figure 35; a, areolar tissue; e, epithelium; h, horny layer of epithelium.

In a previous paper, the writer noted that the dorsum of the tongue
is covered with small, evenly distributed papillæ, easily seen by aid
of a hand lens. These so-called papillæ are here seen to be hardly
papillæ at all, but small folds or wrinkles, although the epithelium is
somewhat thickened at intervals. No glands are to be seen in this
region of the tongue.
The only difference between the anterior region of the tongue
during hibernation and during the feeding season seems to be in the
scaly layer of the epithelium. Instead of the compact, sharply
differentiated layer of scaly cells seen in Figure 36, the anterior
region of the tongue during feeding is covered with a layer of rather
loose, scaly cells, in most of which the nuclei may be seen. No
difference in the amount of sloughing off can be noticed as is the
case with the epithelium of the roof of the mouth.
Figure 37 represents a section, under very low magnification, of
the covering of the base of the tongue. The areolar tissue, a, is about
the same as in the preceding section, except that it is more compact
just under the epithelium than it is in its deeper regions. It seems
also more vascular than in the preceding section.

Fig. 37. Covering of the posterior region of the tongue of the

hibernating animal showing glands, under low magnification; a,
areolar tissue; bv, blood-vessels; g, glands; e, epithelium.

The epithelium, e, is of the stratified squamous variety, but

consists of many more layers of cells than in the preceding section
and is hence several times as thick. While its cells are flattened
towards the surface, after the manner of this kind of epithelium, they
do not form the definite horny layer described above.
 Fig. 38. One of the glands from the posterior region of the tongue of the
hibernating animal, under high magnification; a, areolar tissue; av, alveolus.

The most marked difference between the two regions of the

tongue is the presence, in the posterior or basal region, of numerous
glands, g, probably mucous- or slime-secreting. They are thickly
scattered through the areolar base, close beneath the epithelium.
Two large glands and one small one are shown in the figure under
discussion. Each gland opens to the surface by an apparently wide
duct, but since no good section of such a duct was obtained it is not
shown in the figure. Although the rest of the tissue was well
preserved and showed cell structure clearly, it was with difficulty that
the details of the glands could be determined.
A high-power drawing of a portion of one of the glands is shown in
Figure 38. The large alveolus, av, to the left, is from the peripheral
region of the gland and is surrounded, on its free side, by the areolar
tissue described above. The inter-alveolar spaces, which are
somewhat exaggerated in the figure, are filled with fibers which are
arranged more or less in layers and hence appears different from the
surrounding areolar tissue. The alveoli are circular or elongated in
section, and have fairly wide lumina. They are lined with a single
layer of columnar or cuboidal cells which are very granular, so that
their walls are difficult to determine. Each cell contains, near its
base, a very large, usually spherical nucleus. These nuclei stain
darkly and give the dark appearance to the glands as seen under
low magnification, especially in rather thick sections.
During feeding the epithelium of this region of the tongue consists
of fewer layers of cells than during hibernation but is otherwise
unchanged from what is described above. The glands consist, at
least in all of the material examined, of much fewer alveoli than are
shown in Figure 37. One of these glands is shown in Figure 39.
Although no more care was used in fixation than in the
corresponding tissue of the hibernating animal the glands here show
their cell details far more clearly than in the former tissue; this may
have been partly due to the latter sections being thinner.
The glands are of a compound, tubulo-alveolar type; although
numerous sections through ducts were obtained (as in Fig. 39), no
details of these ducts could be seen.
 Fig. 39. One of the glands from the posterior region of the tongue of the feeding
animal, under somewhat higher magnification than used in Figure 37; av, alveolus;
d, duct of gland; e, stratified epithelium.

As noted above, and as may be seen by comparing Figures 37

and 39, the gland during hibernation, at least in the animals studied,
consists of many more alveoli than during the feeding season; this,
of course, might not prove to be always the case if larger numbers of
animals were studied; the difference in the ages of the animals might
have caused this difference in the glands. In the material studied the
largest glands from the hibernating animals consist of more than
twice as many alveoli as the glands in the feeding animals. As seen
under high magnification there is no noticeable difference in the
glands at the two seasons.
Rathke has given the name of “Geschmackwärzchen” to the
conical projections found on the dorsum of the crocodilian tongue;
they are distinguished by their softness and thinner epithelial
covering from the cones that, in many of these animals, bear the
openings of the mucous glands.
These taste papillæ generally have the form of a truncated cone
and often are surrounded by a shallow circular pit, outside of which,
in turn, is sometimes a small low wall. They are distributed over the
entire dorsum of the tongue, usually at considerable distance from
each other in comparison to the size of the tongue, and are not so
numerous as the taste papillæ of the Mammalia. Rathke found their
absolute number greatest in A. lucius.
Rathke mentions other larger and harder projections on the tongue
of certain Crocodilia which, though not perforated by a mucous duct,
he thinks are of questionable relation to the sense papillæ. They
usually have more the form of a flattened than of a truncated cone,
and are very numerous in some species.
The Roof of the Mouth. In the paper mentioned above the
author notes that the papillæ on the roof of the mouth are evenly
distributed and are more distinct than those of the dorsum of the
tongue. One of these papillæ as seen under fairly high magnification
is shown in Figure 40.
 Fig. 40. The covering of the roof of the mouth of the hibernating animal, under
fairly high magnification; a, areolar tissue; e, epithelium; h, horny layer; f, fibers of
horny layer.

The areolar tissue, a, forming the base of the section is of about

the same character as seen in the section of the tongue. Less than
one tenth of the thickness of the entire areolar base is shown in this
section.
The epithelium, e, where not thrown into papillæ, has also about
the same character as that of the anterior region of the tongue—the
same number of cell layers and the same distinct horny layer.
At intervals the thickness of the cellular part of the epithelium is
greatly increased, and at the same time the horny layer is also
thickened, to form distinct papillæ like the one shown in the figure.
These, as has been said, are comparatively small and have the
shape of a blunt cone. The center of the cone is, of course, made up
of the cellular epithelium, while the outside is covered with the
thickened horny layer from which fibers, f, are often seen projecting.
Near the apex of the cone the nuclei are larger and more widely
scattered than those at the base.
No glands were seen in the roof of the mouth of the hibernating
animal, but since the entire roof was not sectioned it is probable that
they may exist in some regions; in fact, as noted below, sections
through the posterior region of the roof of the mouth of the feeding
animal do show numerous glands.
As might be expected there is comparatively little difference
between this region of the enteron during hibernation and during the
feeding season. The only noticeable difference is in the stratified
epithelium; that of the feeding animal not only has less sharp papillæ
but has also a much thinner scaly layer of cells. As is seen in the
figure of the roof of the mouth during hibernation the scaly cells
make up, except on the papillæ, nearly or quite half of the thickness
of the epithelium, while in the feeding animal they make up not more
than one fourth or one third of the entire epithelium. Very few cells
are seen sloughing off as in Figure 40; possibly the act of feeding
keeps the superficial scaly cells rubbed off smooth.
In the extreme posterior region of the roof of the mouth the
epithelium consists of a greater number of layers (though the
number is very variable) than in the region shown in Figure 40. In
this posterior region, as noted above, glands are found. These
glands have the same structure as those described in connection
with the posterior region of the tongue.
The Œsophagus. Sections of the œsophagus were made from
two regions, an anterior, half-inch caudad to the pharynx, and a
posterior region, half-inch cephalad to the opening of the
œsophagus into the stomach (Fig. 35).
The general structure of the wall of the œsophagus, as seen under
a low magnification, will first be described, after which the minute
structure of the epithelium, as seen under high magnification, will be
discussed.
 In the anterior region the usual layers of the vertebrate enteron are
present, except, possibly, the muscularis mucosa.
The epithelium, to be described later, is, together with the
submucosa, thrown into complicated folds; its closely arranged and
darkly stained nuclei cause it to stand out in strong contrast to the
other tissues of the section (Fig. 41, e).
The submucosa, sm, is of considerable thickness. It is composed
of a fairly dense mass of connective tissue, mainly elastic fibers,
through which are scattered small blood-vessels, bv, and small dark
areas, mb, that are apparently longitudinal bundles of involuntary
muscle fibers. These few and scattered fibers probably represent the
muscularis mucosa that is so well developed in the posterior region
of the œsophagus.
Outside of the mucosa is a thick circular layer of involuntary
muscle fibers, cm, the fibers being collected into irregular bundles,
between which are narrow spaces filled with connective tissue that
contains a few small blood-vessels.
Surrounding the circular layer is a thinner and less clearly defined
layer of longitudinal muscle fibers, lm. The muscle bundles are more
definite than in the circular layer and are separated from each other
by a considerable amount of connective tissue with a few small
blood-vessels.
 Fig. 41. A transsection through the anterior region of the
œsophagus of the hibernating animal under low magnification; bv,
blood-vessels; mb, muscle bundles; other letters as in Figure 42.
 The serosa, s, is here quite indistinct. It consists of a slightly
vascular connective tissue which cannot be distinctly differentiated
from the connective tissue of the longitudinal layer.