Description: Many of us have heard about Tim Horton’s franchisees suing parent franchisor, Restaurant Brands International. But now comes word that franchisees of Second Cup are suing their head office as well. Franchisees are unhappy with their profit performance, arguing that the parent’s use of an advertising fund may have harmed them. Franchisees are also upset that head office has not helped them make up market share lost to other chains.
Date: November 26, 2018
1) How do you rank Second Cup among Canada’s coffee chains?
2) Given that it probably impacts the public image of a brand like Second Cup or Tim Horton’s, why do you think we are seeing these cases of franchisees suing franchisors?
3) In chapter nine of Wiley’s Financial Accounting: Tools for Business Decision-Making, you can read how franchises are accounted for. What classification of assets does a franchise fit under on the statement of financial position?
Description: Thanks a lot for that one! Several years ago, Canadian and US taxpayers bailed out General Motors (GM) during the financial crisis. But GM is back in the black and it is saying it needs to close its plant in Oshawa to retool for the future, leaving 2500 people in this city out of work. The impact is huge.
Date: November 30, 2018
1) Do you know anyone who will be impacted by the GM shutdown? How will this closure impact lives?
2) Did you know that in the financial crisis bailout the governments of Ontario, Canada and the United States all held an equity position in GM, though they all later sold their shares? Do you think that perhaps they should have maintained their equity positions in order to influence company policy? See https://www.cbc.ca/news/politics/general-motors-shares-conservative-government-sells-remaining-stake-in-automaker-1.3022822
3) In chapter seven of Wiley’s Managerial Accounting: Tools for Business Decision-Making, we learn a number of key concepts for decision making, such as relevant costs, sunk costs and opportunity cost. Discuss how GM executives may have employed these cost terms in making their restructuring decisions.
Description: Nissan Chairman Carlos Ghosn has been ousted for financial misconduct. This is shocking news for the man credited with turning the company around. The details of the investigation have not been made public, but one aspect seems to be a under reporting of Ghosn’s compensation. Ghosn has been arrested along with a Nissan director Greg Kelly.
Date: November 19, 2018
1) What intrigued you about this story?
2) Why do you think company officials with so much to lose would risk partaking in this behaviour?
3) In chapter seven of Wiley’s Financial Accounting: Tools for Business Decision-Making, we read about internal control. What aspects of the system of internal control do you think may have failed Nissan in this embarrassing episode?
Description: Do you like chocolate? Well a lot of the world sure does. There’s a bit of a crisis in the cocoa world these days though, according to Bloomberg. One of the big suppliers, Saf-Cacao of Ivory Coast, has become part of a total of 32 exporters who have defaulted on their supply agreements. KPMG has carried out an audit of the industry revealing the extent of the default on contracts.
Date: November 23, 2018
1) Are you a chocolate lover? Were you aware of the cocoa crisis?
2) How might this supply problem influence future market pricing?
3) In chapter one of Wiley’s Auditing: A Practical Approach, you can read about various types of audit engagements that an auditor might perform. What type of audit do you think KPMG performed on the cacao industry?
Description: Deep Earth Energy Production Corp. (DEEP) is going deep. The company is the driving force behind a 3.5 km deep well to be drilled in Estevan Saskatchewan. The well will generate geothermal energy from underground steam, providing a source of green power to the Western province. Funnily enough, DEEP’s deep well source was discovered by the old carbon producing oil industry.
Date: November 22, 2018
1) Are there any renewable energy projects near your university campus? What variety?
2) Why do you think the federal and provincial governments contributed to the costs of the project?
3) See page 25 of Wiley’s Managerial Accounting: Tools for Business Decision-Making. Note the distinctions between Fixed and Variable Costs. How do these terms apply in the story about the costs of DEEP’s power production?
Description: With winter-like weather hitting several parts of Canada last week, you may have seen many citizens enjoying the warmth of a “Canada Goose” jacket. With rising revenues, the company is seeing its shares up about twenty percent. Meanwhile, Canada Goose has invested in the acquisition of Baffin, a footwear manufacturer. It looks like Canada Goose is expanding beyond its warm clothing and into the winter boot market.
Date: November 14, 2018
1) Have you ever worn a Canada Goose jacket? What makes them so popular?
2) What do you think of the company’s expansion into footwear? Is it a good strategic move?
3) Using the guidelines of Illustration 12-3, page 654 of Wiley’s Financial Accounting: Tools for Business Decision-Making, what method is Canada Goose likely to use for its acquisition of Baffin?
Description: Canadians are carrying a lot of debt. Canadians debt ratios now sit at 169% of disposable income of households. In 2006 the ratio was at 132%. Canada’s central bank is concerned that the consumer debt issue could put the economy in trouble as the low interest rates of the past few years creep higher.
Date: November 14, 2018
1) Are you or or your classmates carrying any student debt? How will it impact starting out after university?
2) Do you think consumers have been taking on too much debt during this time of low interest rates and high employment?
3) Check out the Accounting Matters feature on page 535 of Wiley’s Financial Accounting: Tools for Business Decision-Making. What percentage of consumers would default on a mortgage if laid off for more than three months?
Description: According to the theory, the massive US tax cuts of last year were supposed to get the tech companies hiring lots of workers. But according to the Financial Times of London, five large American tech firms, including Apple and Alphabet, spent $115 billion on share buybacks. This could be setting up the companies for long-term problems as instead of investing for the future, they may be focused on short-term gains for investors and executives. Meanwhile, the taxpayers may have to dig deeper or suffer program cuts as the treasury suffers from revenue depletion to pay for the tax cuts.
Date: November 14, 2018
1) What is your feeling towards the tech giants and other companies that seem to have been spending their tax savings on dividends and buying back shares?
2) Do you think tax cuts are a good way to stimulate the economy?
3) In Chapter 13 of Wiley’s Financial Accounting: Tools for Business Decision-Making, problem BE 13-11, page 739, poses the following question regarding Apple: “Why do you think the amount of dividends paid is greater than the amount of capital expenditures in 2014?” Given the information presented in this article and Chapter 13, what do you think the answer might be?
Description: How did this happen? So, you’ve probably heard that marijuana has been legalized and there are now a variety of ways to buy it, depending on where you live. But in New Brunswick, where the government has chosen a Crown corporation model, at least 12 of the roughly twenty Cannabis NB stores were shut down some time in the last week because they were without inventory. Customers showing up at the closed doors were probably not pleased.
Date: November 6, 2018
1) Had you or your classmates heard about this store closure issue? What was your response?
2) On page 6 of Wiley’s Managerial Accounting: Tools for Business Decision-Making, you can read about the impact of stock outs. How do you think these stock outs at Cannabis NB may impact on the company?
3) What journal entries would you prepare to show the sale of a product and the corresponding cost of goods sold when you sell inventory? See Chapter Five of Wiley’s Financial Accounting: Tools for Business Decision-Making.
Description: According to a recent survey by Robert Half, over three-quarters of Canadians are tired at work on a fairly regular basis. If you are tired, it is more difficult to put in a strong effort at work. More mistakes can happen. Profits could suffer. Productivity catalyst Clare Kumar argues that both management and the employees share responsibility in making sure workers get that 7 to 8 hours of sleep most people require.
Date: November 8, 2018
1) Could you relate to this story? Is getting enough rest an issue for your life?
2) What approach might you take to try to determine the cost of tired workers to a company?
3) In Chapter Seven of Wiley’s Financial Accounting: Tools for Business Decision-Making, we can see a discussion of the limitations of internal control. What limitations does worker fatigue best fit under?