Posted by & filed under Accounting Principles, Canadian governments.

Description: If a government plans to spend money through grants or other expenditures, it is normally clearly disclosed as part of the budget process. But there is another class of “hidden” expenditures known as tax expenditures, a combination of various measures that don’t show up in the financial statements. This week the New Brunswick government took the rather important step of trying to estimate the combined effect of these important policy decisions. The various deals are costing the province up to $1.5 billion.

Date:  November 6, 2019

Source:  cbc.ca

Link: https://www.cbc.ca/news/canada/new-brunswick/tax-exemptions-new-brunswick-foregone-revenue-1.5350250

Discussion points: 

 1) Have you ever thought of a tax break in the same light as a government decision to spend money?

2) What part of the story surprised you the most?

3) On page 475 of Wiley’s Financial Accounting: Tools for Business Decision-Making, we read how the Canada Revenue Agency does not allow companies to deduct depreciation expense, but rather uses a system known as capital cast allowance. Would this type of treatment meet the definition of a tax expenditure? What other types of income tax deductions might meet this definition?

Posted by & filed under Financial Reporting and Analysis.

Description: Clothing company Under Armour has admitted it is under investigation by the Securities and Exchange Commission (SEC). The investigation has been ongoing since 2017. Speculation is that the investigation may be looking at revenue recognition issues.

Date:  November 4, 2019

Source:  baltimoresun.com

Link: https://www.baltimoresun.com/business/bs-bz-under-armour-invetigation-five-things-20191105-3a7dwxt3ujgabbitgq7rcjxwhu-story.html

Discussion points: 

1) Are you a user of Under Armour’s products? What do you like about their products?

 2) How might this news impact Under Armour’s business?

3) On page 485 of Wiley’s Financial Accounting: Tools for Business Decision-Making, we read about the world’s most valuable brands as ranked by Interbrand. Check out the most recent rankings for Apple and Google to see how things may have changed since Wiley published this edition.

Posted by & filed under Marketing & Strategy.

Description: Going for an environmentally friendly move, Kentucky Fried Chicken (KFC) is experimenting with a bamboo container for its poutine. If the trial is successful, the Colonel plans to go “all in” on bamboo, using it for its famous chicken. Bamboo is a bit more expensive than the traditional plastic-coated paper packaging, but it is more sustainable and the fact that it “breathes” enhances food quality.

Date:  November 4, 2019

Source:  thestar.com

Link: https://www.thestar.com/business/2019/11/05/kfc-hopes-to-avoid-a-hot-mess-with-new-bamboo-buckets-for-poutine.html?source=newsletter&utm_source=ts_nl&utm_medium=email&utm_email=760BE779956395955CFBBA5C497D22A3&utm_campaign=sbj_17446&utm_content=a01

Discussion points: 

 1) Have you ever purchased food in bamboo packaging? What did you notice?

2) What do you think prompted KFC to make this packaging experiment?

3) On page 554 of Wiley’s Managerial Accounting: Tools for Business Decision-Making, there is a section on the balanced scorecard. One common perspective for the balanced scorecard is the customer perspective. How might this experiment in bamboo packaging be reflected in KFC’s customer perspective?

Posted by & filed under Financial Accounting, Marketing & Strategy.

Description: Google’s parent company has purchased Fitbit for approximately $2.1 billion. This puts Google back into the wearables game as it squares off with Apple. Rumours of the purchase drove Fitbit shares up over 40% in the days preceding the sale, making it a nice week for Fitbit shareholders.

Date:  October 28, 2019

Source:  cbc.ca

Link: https://www.cbc.ca/news/business/alphabet-google-fitbit-deal-1.5344159

Discussion points: 

 1) Have you ever owned a Fitbit appliance? What do you think of it?

2) What would be Google’s strategic interest in purchasing Fitbit?

3) On page 485 of Wiley’s Financial Accounting: Tools for Business Decision-Making, we read about the world’s most valuable brands as ranked by Interbrand. Check out the most recent rankings for Apple and Google to see how things may have changed since Wiley published this edition.

Posted by & filed under Marketing & Strategy.

Description: The folks at Burger King and Popeye’s are happy, but over at that other RBI food company, Tim Horton’s, profits this quarter are down. The RBI company CEO, Jose Cil, said “Our results at Tim Hortons were not where we want them to be.” There is some speculation that Tim’s new reward program may be lowering the value of the average purchase.

Date:  October 28, 2019

Source:  financialpost.com

Link: https://business.financialpost.com/news/retail-marketing/update-1-restaurant-brands-sales-miss-estimates-as-tim-hortons-disappoints

Discussion points: 

 1) Have you joined the Tim Horton’s reward program, taking advantage of every eighth coffee for free?

2) Why do you think Tim Horton’s may have launched the new rewards program?

3) Go to pages 485-486 of Wiley’s Financial Accounting: Tools for Business Decision-Making. What is the lifespan of a Tim Horton’s franchise? What does this mean for amortization of this intangible asset?

Posted by & filed under Financial Accounting.

Description: Ten percent or more of loans are in trouble at the Atlantic Canada Opportunities Agency (ACOA). That doesn’t sound like a very positive use of our taxpayer dollars. Banks typically have a loss rate of about one percent on business loans. Another federal government agency, the Business Development Bank of Canada, reports that only 3.3 per cent of its loans are in trouble.

Date:  October 28, 2019

Source:  financialpost.com

Link: https://business.financialpost.com/entrepreneur/fp-startups/east-coast-funding-agency-acoa-grapples-with-high-rate-of-bad-loans-worth-tens-of-millions

Discussion points: 

 1) Have you ever worked for a company that had an ACOA loan? How was the company doing?

2) Why do you think the rates of impairment would be so different for ACOA versus the banks?

3) Governments and banks both loan money to businesses. In making these loan decisions, they use various measures and indicators to determine credit worthiness. Take a look at page 543 of Wiley’s Financial Accounting: Tools for Business Decision-Making and read the various ratings the Dominion Bond Rating Service uses to rate the credit-worthiness of companies. What is the highest quality rating?

Posted by & filed under Financial Accounting.

Description: The government of New Brunswick is taking steps to reduce red tape for business. The Business Navigators program will begin as a pilot project, where government provides business owners with a special phone line and email they can use to ask for assistance in navigating the regulatory framework. New Brunswick’s initiative is getting positive feedback from the Moncton Chamber of Commerce. John Wishart, CEO of the Chamber, said the biggest problem in dealing with red tape is the time delay it imposes on business projects.

Date:  October 25, 2019

Source:  cbc.ca

Link: https://www.cbc.ca/news/canada/new-brunswick/business-navigators-red-tape-1.5334046

Discussion points: 

 1) Have you or any of your employers run into delays from red tape?

2) What do you think of the Business Navigators program as a means of addressing the red tape problem?

3) Government places costs on businesses for such things as Employment Insurance and the Canada Pension Plan. How do businesses account for their share of these programs, as well as the deductions they must make from employees’ paycheques for the employees’ share of the costs? Hint: Check out Chapter 10 of Wiley’s Financial Accounting: Tools for Business Decision-Making.

Posted by & filed under Accounting Careers, Managerial Accounting.

Description: Amazon profits fell in the latest quarterly results. The decrease has come from Amazon’s efforts to deliver parcels even faster for its Prime customers. Looking for one day delivery to Amazon Prime members is causing problems for Amazon. An analyst said the average one day order is for only $8.32. The problem is it costs Amazon $10.59 for shipping and handling.

Date:  October 24, 2019

Source:  nytimes.com

Link: https://www.nytimes.com/2019/10/24/technology/amazon-earnings.html

Discussion points: 

1) Were you aware that Amazon was making most of its profits from its cloud services rather than retail side of the business?

2) Has anyone in your class become a Prime member? Do you think the additional services are worth the annual fee?

3) Starting on page 227 of Wiley’s Managerial Accounting: Tools for Business Decision-Making you can read a section on Cost-Volume-Profit Analysis. Given what we know about Amazon’s costs for these one-day delivery transactions to Prime members, how do you think the managerial accountants at Amazon may have weighed in on these decisions to further decrease shipping times?

Posted by & filed under Financial Accounting.

Description: You may have heard of customers lining up to purchase a new pair of high end running shoes. But have you ever thought about people who buy, sell and collect sneakers as works of art? One Canadian collector reportedly paid in excess of $1 million dollars to Sotheby’s for 99 pairs of classic running shoes. Then he topped that off by paying approximately $600,000 for a rare set of shoes. One problem with collecting sneakers though is that these assets will deteriorate over time, perhaps crumbling to a dusty pile of waste.

Date:  October 26, 2019

Source:  cbc.ca

Link: https://www.cbc.ca/news/entertainment/sneakers-collecting-art-1.5331990

Discussion points: 

1) Have you ever heard about sneaker collecting? What do you think of sneakers as a work of art?

2) How much would you be willing to pay to visit Sneakertopia?

3) On page 317 of Wiley’s Financial Accounting: Tools for Business Decision-Making is a section on valuing inventory at lower of cost or net realizable value. What would be some of the challenges in applying this rule to an inventory of sneaker art?

Posted by & filed under Managerial Accounting.

Description: GM and the striking United Auto Workers seem to have reached a deal, ending the first strike against GM in over ten years. Financial analysts have estimated that the strike has cost GM roughly $2 billion. Getting the workers to ratify the agreements may prove challenging, with many of them upset that the automaker announced it would shutter four more plants in the United States.

Date:  October 16, 2019

Source:  financialpost.com

Link: https://business.financialpost.com/transportation/autos/gm-uaw-hammer-out-details-as-signs-suggest-agreement-near?video_autoplay=true

Discussion points: 

 1) If you were a GM worker presented with this contract offer, what way would you vote?

2) How do you think accountants could be involved in calculating that figure of $2 billion in losses?

3) On page 15 of Wiley’s Managerial Accounting: Tools for Business Decision-Making is a discussion GM’s use of the theory of constraints to change operations in its plants. To what extent do you think this theory of constraints might impact labour relations?