Description: There is no question that Canadian governments are spending borrowed money at a prodigious rate during this pandemic in order to support citizens and keep the economy moving. In an opinion piece in the Toronto Star, Daniel Tsai, a former government advisor who now lectures at Ryerson, says that throwing on a new series of taxes to pay down the debt would not be the way to go. Tsai argues that there is a need for non-partisan government and business experts to develop strategies on how to proceed.
Date: October 9, 2020
1) What increased government spending have you noticed during the pandemic?
2) What stood out to you in reading this article?
3) One of the options for increased government revenues is in increasing sales taxes. Wiley’s Financial Accounting: Tools for Business Decision-Making, discusses how companies account for the collection of sales taxes (see Chapter 10). What are the journal entries to show the collection of sales tax at the time of sale and the later remittance of that tax to the government?
Description: It’s often an exciting time when Apple unveils a new iPhone, and this past week seemed true to form as Tim Cook introduced the iPhone 12. One surprise for some was that Apple is not going to be including any charging adapters or earbuds with the smartphones. With so many chargers and headphones already owned by potential users, Apple saw this move as one to cut electronic waste. The articles does note, however, that this will make a very small contribution to solving the problem.
Date: October 16, 2020
1) Are you an Apple user or not? Why?
2) What do you think of this move by Apple to reduce e-waste?
3) In Wiley’s Financial Accounting: Tools for Business Decision-Making, Chapter 5, we can read how some business sectors are generally “low gross margin” while others are “high gross margin.” In which sector does Apple fall?
Description: The Corona virus crisis has been bad news for certain business sectors, but you can’t say that about real estate. The market continues to be red hot with the Canadian Real Estate Association’s declaration that home prices are up 17% in this past year. Some have suggested that with the virus keeping more families at home for work and school, a desire for more living space may be one reason for the sharp rise.
Date: October 15, 2020
1) Are you planning to buy a home after you finish university? How will this rise in price impact you?
2) Has your university community seen an increase in cost for student rentals given this rise in real estate prices?
3) In Wiley’s Financial Accounting: Tools for Business Decision-Making, we know that normally a long-term asset like a house would be treated as property, plant and equipment. If you were a home builder, however, and you had several homes for sale, where would these be found on your statement of financial position?
Description: New Brunswick and its Maritime cousins, PEI and Nova Scotia, have been the envy of other parts of Canada due to their deft handling of the Corona virus crisis. But this past week, two health zones in New Brunswick were placed back in orange status, after weeks of relative freedom under the yellow banner. This means some businesses, like hair dressers and gymnasiums, will have to close shop, and social visits will be restricted to two-family bubbles.
Date: October 9, 2020
1) What phase or colour is your university community in?
2) Has your university campus been impacted by a change in status during this school year? How has it impacted your campus?
3) In Wiley’s Financial Accounting: Tools for Business Decision-Making, we learn very early on about the concept of prepaid insurance. Think of vendors like hairdressers and gymnasiums who are impacted by shutdowns like this. Is there any insurance product that would protect them from the impacts of a pandemic? (Hint: perhaps do a bit of a search to see if pandemic insurance exists).
Description: WestJet pilots have agreed to take a 50% pay cut to keep more of them working during these interesting times. Though WestJet originally thought the effect of the pandemic on air travel would force a reduction of about 1,200 staff, the pilots’ offer has cut the number to around 450. Actions like this across the economy are helping to keep highly trained employees in their companies until the situation turns around.
Date: October 5, 2020
1) Would you be willing to take a 50% pay cut to save your fellow-workers’ jobs?
2) Why is it so important for businesses to keep highly-skilled people employed?
3) The opening vignette of Chapter 9 in Wiley’s Financial Accounting: Tools for Business Decision-Making, tells us how WestJet depreciates various components of its airplanes. Do you think WestJet could make a case for charging less depreciation in 2020 on some of its aircraft components?
Description: Canada’s competition bureau is taking on Amazon, the giant of the retail world that has only grown stronger during the Covid-19 period. The basic problem, as has been observed by US Senator Elizabeth Warren, is that Amazon owns the marketplace, and the company sells its wares in that same market. This conflict of interest causes concerns around the pricing of its goods versus other sellers in the market, and, about how Amazon may be sharing customer information across its various structures, such as Alexa, Whole Foods, and the regular Amazon online store. Former Amazon V.P. Jeff Bray has said “Amazon’s strategy of growth over profits doesn’t make any sense at all, unless your end goal is to become monopolistic in size to point in which you regain pricing power.”
Date: October 11, 2020
1) Have you been using Amazon’s services more in recent months?
2) What did you find was the most interesting part of the article for you?
3) Did you ever think about the title of your accounting text, Wiley’s Financial Accounting: Tools for Business Decision-Making? What tools from this text could accountants apply in assisting the Competition Bureau in this examination of Amazon?
Description: The Canada Revenue Agency (CRA) wants to do your taxes. That might save you some time and labour, but it doesn’t please everyone. In Britain and France where such a system has been tried, it has delivered some questionable results. And given that a 2017 report by the Auditor General of Canada said that over 50% of the time calls to the CRA were not even answered, it might be fair game to question the idea of the ability of this agency to take on additional responsibilities.
Date: October 2, 2020
1) How much time do you spend each year doing your taxes?
2) Would you be willing to rely on the CRA to do your tax return and let you know the size of your refund or amount owing?
3) Chapter One of Wiley’s Auditing: A Practical Approach, discusses several types of audits that auditors can perform. What type of audit do you think the Office of the Auditor General was conducting when it discovered the problems at the Canada Revenue Agency?
Description: Air Canada has ordered 25,000 Covid-19 test kits that may be able to detect the virus in about five minutes. With the airline industry being battered as the virus dissuades passengers from flying, the test kits may offer a way to convince potential customers to take to the sky once again. A quick test may also be useful in persuading government authorities to rethink travel regulation during the pandemic.
Date: October 1, 2020
1) Have you flown since the original Covid-19 shutdown in March? What was your experience like?
2) Has the need to fly to your university campus changed how or where you are studying this year?
3) On pages 9-32 and 33 of Wiley’s Financial Accounting: Tools for Business Decision-Making, we see a comparison of the Return on Assets of both Air Canada and WestJet. What do you think would be happening to this ratio for Air Canada and WestJet in 2020?
Description: On Friday RBC announced that it would not be funding new oil drilling projects in the Arctic. Neither would the giant bank be financing new coal-fired projects. Andrew Block, speaking on behalf of RBC, said “We are committed to finding ways to balance the transition to a low-carbon economy.” It will be interesting to see how other Canadian banks respond to RBC’s initiative.
Date: October 2, 2020
1) What do you think about RBC’s move?
2) What sort of environmental efforts are students at your campus carrying out?
3) On page 1-26 of Wiley’s Financial Accounting: Tools for Business Decision-Making, you can read about an important section in a company annual report called Management Discussion and Analysis (MD&A). If you were preparing the MD&A for RBC’s next annual report, how would you present this decision on future investments?
Description: Last week this blog featured a story on the sale of Canada’s Mountain Equipment Co-op (MEC) to Kingswood Capital Management. This week comes news that MEC considered another alternative to solve its financial problems: a direct appeal to its close to six million members. But the decision-makers rejected the member bailout model as “impracticable to impossible.”
Date: September 25, 2020
1) If you were a MEC member would you have been willing to support a member-based bailout with some of your own cash? Why?
2) The article notes that a special committee of the board weighed the factors involved in the member bailout option and then decided against it. Do you think the committee made the correct decision? Why or why not?
3) Chapter 2 of Wiley’s Financial Accounting: Tools for Business Decision-Making, contains a section titled “Framework for the Preparation and Presentation of Financial Statements.” Illustration 2.21 summarizes this conceptual framework. What item in Illustration 2.21 seems particularly applicable for the MEC situation?