Tavares and CRA in $8 million dispute

Posted by & filed under Accounting Careers, Financial Accounting, Personal Tax.

Description: John Tavares, captain of the Toronto Maple Leafs, is suing the Canada Revenue Agency in an $8 million dispute regarding a reassessment of his 2018 income tax return. The essence of the dispute relates to the taxation rate on his $15.25 million signing bonus. Tavares and his advisors believe the bonus should be taxed at a lower rate of 15%, arguing that it falls under the inducements clause for artists, musicians, and athletes detailed in the Canada-US Tax Treaty. The CRA, for its part, is demanding $6.8 million in taxes and an additional $1.2 million in interest.

Date:  February 7, 2024

Source:  bnnbloomberg.ca

 Link: https://www.bnnbloomberg.ca/toronto-maple-leafs-captain-john-tavares-in-8m-tax-dispute-with-cra-1.2032484

Discussion points:

1) How do you feel about special tax-treaty provisions for athletes, artists, actors, and musicians?

2) Do you have interest in a career as a tax advisor?

3) Page 3-4 of Wiley’s Financial Accounting: Tools for Business Decision-Making speaks to the subject of NHL signing bonuses. What are the key factors to consider as to when the bonus would result in an accounting transaction?

The Big Owe

Posted by & filed under Financial Accounting.

Description: The “Big Owe” is a nickname long associated with Montreal’s Olympic Stadium, given its history of cost overruns and other issues. The original retractable roof had been a source of problems, and the stadium has not been available for winter events for quite some time. But now, rather than pursue the option of a costly demolition, Caroline Proulx, Quebec’s Tourism Minister, announced a four-year construction project to replace the roof with a glass structure. The new roof will allow year-round stadium use, generating new revenues for the Olympic Park.

Date:  February 5, 2024

Source:  cbc.ca

 Link: https://www.cbc.ca/news/canada/montreal/quebec-to-spend-870m-on-a-new-roof-for-the-olympic-stadium-1.7104971

Discussion points:

1) How many of you and your classmates have been to an event at the Olympic Stadium?

2) What do you think about Concordia professor Moshe Lander’s opinion that the government should “put it out of its misery and knock it down?”

3) Page 8-8 of Wiley’s Understanding Financial Accounting has a section titled “How Do We Account for Costs Subsequent to Purchase?” Searching for “yes” answers to the approach outlined in this section, do you think the costs of the new roof should be capitalized or expensed?

Debt Reduction?

Posted by & filed under Accounting Careers.

Description: New Brunswick Crown utility NB Power has entered a sale-leaseback transaction for its two head office buildings with Forum Asset Management of Toronto. The $39 million transaction was spoken of as a debt-reduction initiative. Since NB Power will continue to lease the larger of the two buildings, however, it was not clear from the article what the present-value of any net savings would be.

Date:  February 7, 2024

Source:  ctvnews.ca

 Link: https://atlantic.ctvnews.ca/more/nb-power-sells-two-fredericton-office-buildings-to-pay-down-debt-reduce-expenses-1.6760059

Discussion points:

1) Have you studied sale-leaseback transactions yet in your business studies?

2) The story is rather thin on details. For example, it does not tell us the present value of savings from the transaction. Do you have interest in a career in business writing that might bring readers clarity to stories with accounting issues like this one?

3) Chapter seven of Wiley’s Managerial Accounting: Tools for Business Decision-Making educates us on the concept of relevant costs in making business decisions. What do you think would be the relevant costs NB Power should consider in choosing between the alternatives of keep versus sale/leaseback of their two head office buildings?

Good Quarter for Canada Goose

Posted by & filed under Financial Reporting and Analysis, Student life.

Description: Canadian clothier Canada Goose reports good results with its latest quarterly earnings of over $130 million. Revenues were almost $610 million, up by six percent over results from the previous year. Canada Goose anticipates that its sales results for the full 2024 year will be somewhere in the range of $1.285 billion and $1.305 billion. Obviously, there are lots of buyers out there for what some view as luxury winter-wear.

Date:  February 1, 2024

Source:  ctvnews.ca

 Link: https://www.ctvnews.ca/business/canada-goose-reports-130-6m-q3-profit-revenue-up-6-from-year-earlier-1.6751136

Discussion points:

1) Do you see many Canada Goose jackets on your campus?

2) What is the purpose for companies releasing quarterly financial results?

3) Page 2-19 of Wiley’s Financial Accounting: Tools for Business Decision Making compares the Price-Earnings (P/E) ratios of Canada Goose and Aritzia for 2021 and 2020. What are the most recent P/E ratios for these two companies?

First Netflix; Now Prime

Posted by & filed under Financial Reporting and Analysis, Student life.

Description: Say “so long” to the good old days of commercial-free viewing on Amazon Prime. The streaming giant announced that starting Monday, clients will start seeing commercials unless they cough up an added fee of $2.99 each month. Bloomberg’s Geetha Ranganathan notes that “It’s very difficult in the streaming world to make money.” This streaming transition appears to be one more example where tech upended a traditional business model, only to find that the transformed landscape was not the profit generator investors were after.

Date:  February 2, 2024

Source:  cbc.ca

 Link: https://www.cbc.ca/news/business/cheap-ad-free-streaming-is-probably-gone-1.7102266

Discussion points:

1) How do you and your classmates feel about the insertion of ads into your streaming services?

2) What can consumers do to protest this format change?

3) The CBC article tells us about the profit margin on streaming services as compared to advertising. How do you calculate profit margin (Hint: See page 12-31 of Wiley’s Understanding Financial Accounting?

Weaker Market = Lower Earnings

Posted by & filed under Accounting Careers, Student life.

Description: A report by TD Economics may be bad news for this spring’s graduates. In the current economic slowdown, TD Economics says new grads may take a lower starting salary than new entrants who may have graduated when unemployment was lower. The report offers it may take a decade for new employees to catch up, stating “People who start out behind are more prone to stay behind, and women are more at risk.”

Date:  February 1, 2024

Source:  thestar.com

 Link: https://www.thestar.com/business/graduates-entering-weak-markets-face-long-term-effects-lower-earnings-td-economics/article_237a0eb6-28c8-5787-b1a2-3ecb6d44434d.html?source=newsletter&utm_email=760BE779956395955CFBBA5C497D22A3

Discussion points:

1) How is the demand for new graduates at your university?

2) Accountancy seems to be one profession where demand for new grads remains high. How is the starting compensation from accounting firms comparing to prior years?

3) Page 12-1 of Wiley’s Understanding Financial Accounting provides an account of how students in clubs or courses at a number of Canadian universities are developing job-ready skills in picking stocks with real money. Does your university have such a club or program?

That’s Quite a Bit of Game Time

Posted by & filed under Marketing & Strategy, Student life.

Description: So you sit down to watch a game of hockey, let’s say, or maybe some basketball, hoping for a few minutes relaxation. Did you realize, however, that you may be spending up to 21% of your viewing time staring at betting advertisements? Researchers from the CBC television program Marketplace teamed up with the University of Bristol to follow gambling ads in five NHL hockey games and 2 NBA broadcasts in October 2023. Their results indicate that, on average, there is a gambling ad of some sort every 2.8 minutes.

Date:  January 19, 2024; updated January 22, 2024

Source:  cbc.ca

 Link: https://www.cbc.ca/news/marketplace/sports-betting-gambling-advertisements-1.7086400

Discussion points:

1) Do you or any of your classmates complain about the volume of betting ads during your favourite sports events?

2) In terms of a strategic move, what are the strengths and weaknesses of the industry using this high concentration of coverage during sporting events?

3) Page 3-4 of Wiley’s Financial Accounting: Tools for Business Decision Making talks about the concept of “perceived value” of an National Hockey League (NHL) franchise. How might the increase in sports betting influence the value of an NHL franchise?

Ikea’s Cutting Prices!

Posted by & filed under Accounting Careers, Marketing & Strategy, Student life.

Description: Furniture favourite Ikea is cutting prices on over 1,000 items. This is excellent news for Canadians battling rising prices, and perhaps particularly so for students struggling to furnish their apartments while off at university or college. One helpful move for students will see the BILLY Bookcase moving to $199 from its previous $249. And should you need something to sit on, the STRANDMON Armchair will drop $349, a $50 reduction to help the pocketbook.

Date:  January 26, 2024

Source:  msn.com

 Link: https://www.msn.com/en-ca/money/other/ikea-canada-to-cut-prices-on-more-than-1k-items-here-s-what-you-could-save/ar-BB1hfVRh

Discussion points:

1) When you think of your friends and classmates on your campus, how many have at least one piece of IKEA furniture?

2) If you were an accountant at IKEA, what type of information might your bosses have been looking for as they made this pricing decision?

3) Illustration 9.1 of Wiley’s Managerial Accounting: Tools for Business Decision Making shows us the four key factors that impact pricing decisions. Which of these factors do you think would have been the most influential in the IKEA decision?

“Brazen” Fraud Scheme

Posted by & filed under Ethics, Fraud.

Description: Canadian Kyle Tsui pleaded guilty in an American court last week on charges that he had bilked $6 million dollars from approximately 88,000 customers. Tsui’s Allergy Testing Company offered these customers allergy and food sensitivity tests based on a small hair sample. But, as U.S. Attorney Damian Williams said, the company “didn’t even attempt to test the samples his paying customers sent in, instead directing others to throw the samples in the garbage.” Clients were sent bogus reports, telling them what foods to steer clear of.

Date:  January 26, 2024

Source:  ctvnews.ca

 Link: https://www.ctvnews.ca/canada/ontario-man-pleads-guilty-in-brazen-fraud-scheme-in-the-u-s-1.6744564

Discussion points:

1) Do you think you could have been lured in by a scheme like this?

2) Tsui will be sentenced in May. What kind of sentence would you be looking for in such a case?

3) Page 1-26 of Wiley’s Understanding Financial Accounting speaks of codes of professional conduct that accounting organizations have developed. Do you think a code of conduct can prevent this type of fraud from being perpetrated on customers?

Not the Category You Want to Lead

Posted by & filed under Accounting Careers, Marketing & Strategy, Student life.

Description: It’s probably not the type of “leadership” position Rogers Communications was looking for; the news that Rogers has replaced Bell as the most complained about service provider in the telecommunications space in Canada. The Commission for Complaints for Telecom-television Services reports that Rogers racked up approximately 20% of all the complaints registered for the year ended 31 July 2023. The Commission noted that “the purpose of our annual report is to consolidate all that data so that service providers can see where their customers’ pain points are.” One would hope that the companies are all listening.

Date:  January 16, 2024

Source:  msn.com

 Link: https://www.msn.com/en-ca/news/other/rogers-overtakes-bell-in-annual-report-on-telecom-complaints-as-wireless-issues-rise/ar-AA1n4gsX

Discussion points:

1) How many of your classmates have ever launched a complaint about your cell service?

2) If you were an accounting officer with Rogers, what information would you recommend that would help marketing see the cost of the complaints?

3) Page 4-4 of Wiley’s Understanding Financial Accounting tell us Rogers is involved in a broad range of business interests. What might be some of the challenges this poses in dealing with “pain points” reported by the customers?