Description: March 19 is budget day in Canada, and, of course, there’s speculation out there on what measures the budget will include. One thing being discussed is what has been called a life-long learning account. Supposedly the account will receive a top-up from the federal government, something like the RESPs parents create for children. This new program would help Canadians fund their education in various approved programs as their careers progress.
Date: March 14, 2019
1) Have you ever heard about the life-time learning concept during your time at university? What are your expectations in this regard as you prepare to graduate?
2) What do you think of this measure? Is it worth the cost?
3) Public sector financial statements are discussed in Wiley’s Advanced Accounting. What could the Government of Canada disclose in its financial statements to help Canadians track the costs of new programs like this?
Description: Did you know the most common type of household in Canada is now “solo?” Approximately four million Canadians are living alone, a huge increase from the early 1980s when the number was closer to 1.7 million. Grocers are moving to respond, with an increase in single serve offerings. Travel companies like Air Canada, Transat and Sunwing are looking at this space as well with packages aimed towards this market segment.
Date: March 7, 2019
1) Have you ever lived alone? What will your living arrangements look like after you graduate?
2) The article tells us how business opportunities are emerging for addressing the needs of the growing number of single households. What might be some marketing opportunities for accountants to serve this market segment?
3) Page 492 of Wiley’s Financial Accounting: Tools for Business Decision-Making has a discussion comparing the profitability of Air Canada versus Westjet. If Air Canada continues to suspend the single supplement as a means to gain new market share, how might its profit margin be impacted?
Description: If you live in Ontario, New Brunswick, Manitoba or Saskatchewan, listen up. Because these four provinces have a federal carbon tax imposed, citizens are eligible for a tax rebate. In Ontario, the amount is estimated at around $300 for a family of four. The carbon tax does not actually start until 1 April 2019, but apparently the government would like you to have a few bucks in your pocket to offset the tax when it becomes effective. There’s only one rebate per household.
Date: March 6, 2019
1) Were you aware of this new tax credit?
2) Have you checked the link in the article to see if you qualify for the extra 10% supplement for the rural and small communities supplement?
3) See page 57 of Wiley’s Financial Accounting: Tools for Business Decision-Making. What kind of a “user” of financial information is the Canada Revenue Agency?
Description: Canadian banks already have had some pretty profitable years. But in the most recent year, the tax cuts in the United States have saved Canadian banks millions of dollars. The Bank of Montreal estimates the tax cut generated about $100 million in benefits in 2018. TD sees its own figures at roughly $60 million a quarter.
Date: March 8, 2019
1) The story tells us the US corporate tax rate has been cut from 35% to 21%. How do corporate tax rates in Canada compare?
2) Do you think that this reduction of tax rates would influence strategic decisions of Canadian banks regarding foreign expansion?
3) Page 85 of Wiley’s Financial Accounting: Tools for Business Decision-Making tells us that TD Bank’s price-earnings ratio of a couple of years ago. Check out TD’s most current P/E ratio. Does it appear that the US tax cuts may have impacted how investors view TB Bank?
Description: In a race to see which ride service will go public first, it looks like Lyft is going to race rival Uber. In its move towards an initial public offering (IPO) on the stock market, Lyft has released financial information for the first time. And the results are interesting. While the company is rapidly growing, doubling its revenue in 2018, it faces the same problem of several other prominent “gig economy” representatives: it doesn’t make money. Lyft has lost somewhere around $3 billion since 2012. As another example, Dropbox went public last year, with kind of a scary warning that it might never make money.
Date: March 1, 2019
1) Why would investors be so interested in a company that has lost so much money?
2) Have you ever checked out a tech darling to see if it – like Dropbox and Lyft – may have never made money (or perhaps is only marginally profitable)? Organize a class exercise to see if you can build a bit of a list of unprofitable companies in the gig economy.
3) See case CT3-2 on page 157 of Wiley’s Financial Accounting: Tools for Business Decision-Making. There you can see a short case about Lyft’s rival Uber. Consider taking on this case as a class activity.
Description: A group of companies with no employees operating out of a house in rural Nova Scotia reported sales of $56 million. That might have been the first clue that something was wrong. But by claiming that one of its suppliers was “Vandalee Industries” the scheme may have come totally unravelled. A Canada Revenue Agency (CRA) staffer was reminded of George Costanza’s fictional company Vandelay Industries and included this coincidence in the support for a search warrant on a Nova Scotia company that had claimed over $3 million in sales tax refunds. CRA had paid out refunds of $276,000 to the alleged fraudsters before auditors became suspicious and put a hold on further payments.
Date: March 1 , 2019
1) What do you think was the biggest mistake the perpetrators of this sales tax refund scheme made?
2) Would you consider a career as a sales tax auditor? What do you think would be some of the key skills a sales tax auditor would need?
3) In chapter ten of Wiley’s Financial Accounting: Tools for Business Decision-Making you can read about accounting for sales taxes. What journal entry would a company record when it collects goods and services tax on a sale of merchandise?
Description: Well, no one lost their job, but some might wonder why following news this week that officials at the International Civil Aviation Organization (ICAO) in Montreal mishandled a “watering hole” attack on their systems in November, 2016. CBC recently obtained documents showing the depth of the breach and the ICAO’s delayed and misplayed reaction. The ICAO, a United Nations agency, refused technical help for several days from experts at the New York headquarters, further compounding problems. As well, the report notes part of the problem can be attributed to security issues that should have been fixed years ago.
Date: February 27 , 2019
1) The article describes this attack as a “watering hole” attack. Do you know some common names used to describe other types of data hacks and attacks?
2) Has your university ever been the victim of hackers? What happened?
3) The CBC was the lead media agency in breaking this story. When we hear that title CBC, Canadians recognize it right away. What type of asset is associated with that recognition? (Hint: Check out page 485 in Wiley’s Financial Accounting: Tools for Business Decision-Making.)
Description: After a pretty good start following a 2015 merger of food giants Kraft and Heinz, it looks as if now the bloom may be off the rose. Company shares recently dropped twenty percent with concern in the market about slow growth and changes in consumer tastes. Some have wondered if the cost-cutting regime imposed by one of the controlling companies, Brazil’s 3G Capital, may have gone too far. The theory is that too much cost cutting may have tarnished the marquee food brands.
Date: February 22 , 2019
1) The article notes how consumer choices are switching, with customers moving to fresh products,”hipper brands” and private label brands. Do you have a bottle of ketchup in your fridge? If so, who made it?
2) Have you ever thought as an aspiring accountant how advice to cut costs could adversely affect your company? What would be a good way to teach the principle that sometimes cutting costs can be exactly what a company does not need?
3) In the article, it mentions that the company recorded a $15 billion write-down in its intangible assets. If an intangible asset is impaired and is written down, can the write-down ever be reversed? (Hint: See page 483 in Wiley’s Financial Accounting: Tools for Business Decision-Making.)
Description: With too much debt and too much inventory, Payless Shoes will be seeking bankruptcy protection. All of its almost 250 stores in Canada will be shutting down. The company missed its February rent payments on most of those stores, signalling bad news for employees and landlords. One has to wonder if online sales may have been a big factor in the shoe-seller’s decline.
Date: February 19 , 2019
1) Have you been a fan of Payless Shoes? When did you last shop there?
2) To what extent do you think online sales may have hampered Payless?
3) In this story we can read how Payless had too much inventory. Where in Wiley’s Financial Accounting: Tools for Business Decision-Making can you find two financial ratios that can help a company evaluate its inventory levels? What are those ratios?
Description: Well it was one of the most spectacular corporate failures of this century, the sudden decline of Enron. The crash of this company put thousands out of work, ruined their pensions and left stockholders holding worthless shares in a former stock market darling. As well, Enron took down one of the world’s largest accounting firms, Arthur Andersen, for its part in the scandal. This week Enron’s sad story came back into focus when its former CEO, Jeffrey Skilling, was released from custody after spending 12 years in jail and 6 months in a community facility. Jeffrey Skilling’s original sentence was for 24 years with $45 million in fines. In 2013, Skilling received a sentence reduction.
Date: February 22 , 2019
1) In the past few years, we have moved farther and farther away from the time of the Enron Scandal. At one time a professor who wanted to start a discussion on ethics could easily fall back on the Enron story. But is that still the case? If you are currently at university, does the name Enron mean anything to you? If so, what did you know about the story?
2) How would discussing the Enron story help students in learning more about professional ethics?
3) On page 76 in Wiley’s Financial Accounting: Tools for Business Decision-Making you can read about an important accounting assumption called “going concern.” Why is this assumption so important to the preparation of financial statements?