Wiley Accounting Updates

Posted February 22nd, 2021 by Brent White & filed under Accounting Careers.

Description: Facebook is apparently unhappy with Australia’s efforts to have tech companies pay for news content on its feeds. In effect, Facebook has blocked sharing of Australian news on the platform in an attempt to convince Australia’s parliament that it has taken the wrong path. Don Pittis of CBC News wonders if Western democracies will have to come up with some sort of joint action to deal with the tech giants.

Date: February 19, 2021

Source: cbc.ca

Link: https://www.cbc.ca/news/business/don-pittis-facebook-australia-governments-gang-up-1.5919005

Discussion points:

1) Were you aware of this controversy? What is your opinion of the action taken by Facebook?

2) What do you think Western democracies should do to address the decline of the traditional news media?

3) On page 8-12 of Wiley’s Financial Accounting: Tools for Business Decision-Making, the inset “Accounting Matters” box discusses a controversy around using social media, like Facebook, to attempt to reach consumers who are overdue on their accounts. If you were a credit manager trying to collect on overdue receivables what methods might you use?

Posted February 22nd, 2021 by Brent White & filed under Personal Tax.

Description: There have been numerous stories in the media recently letting Canadians know that they will be taxed on benefits provided by the federal government during the COVID crisis. Benefits such as the Canada Emergency Response Benefit (CERB) and the Canada Emergency Student Benefit (CESB) did not have tax removed at source, meaning Canadians who have received them may have to do some juggling when taxation time rolls around. Jamie Golombek of CIBC Wealth Management offers advice on how a contribution to an RRSP might help you cut the amount you owe to the federal government.

Date: February 19, 2021

Source: financialpost.com

Link: https://financialpost.com/personal-finance/taxes/how-an-rrsp-contribution-can-help-reduce-tax-owing-on-any-covid-related-benefits

Discussion points:

1) Did you receive the CERB, the CESB, or any similar benefit from the federal government in 2020?

2) Have you made any contributions to an RRSP previously? Could a contribution before the March 1 deadline help you reduce or eliminate any tax payment on your total income for 2020?

3) Wiley’s Financial Accounting: Tools for Business Decision-Making, deals with the subject of payroll liabilities beginning on page 10-6. Read this section of the text and determine what accountants mean by the phrase “at source.”

Posted February 15th, 2021 by Brent White & filed under Accounting Careers, Canadian Economy.

Description: Bitcoin is soaring to new heights. Tesla has said it will soon accept the cryptocurrency as payment for its electric cars, and, as part of this strategy it has salted away $1.5 billion worth of Bitcoin. This is seen as part of the reason that Bitcoin has jumped 50% this year.

Date: February 8, 2021

Source: cbc.ca

Link: https://www.cbc.ca/news/business/tesla-bitcoin-1.5905235

Discussion points:

1) Do you know anyone who has invested in Bitcoin? What price did they pay?

2) The article notes that some see Bitcoin as “a store of value” at a time when governments have been borrowing heavily to combat the pandemic. If you were a chief financial officer at a company, would you be willing to recommend an investment in Bitcoin?

3) Read the inset box “What is Cash?” in Wiley’s Financial Accounting: Tools for Business Decision-Making. Do you believe Bitcoin should be accounted for as cash on a company’s balance sheet?

Posted February 15th, 2021 by Brent White & filed under Contemporary Business Issues.

Description: In a recent blog post, Brad Smith, President of Microsoft, brought some good news to the traditional news media. Smith’s frank statement – “But one thing is clear – the internet and social media have not been kind to the free press” – seems an apt summary for how the internet has strangled revenue sources of traditional media. Microsoft said it shares revenue with media outlets and it supports an Australian legislative effort to level the playing field between media companies and the tech giants like Facebook and Google.

Date: February 12, 2021

Source: ivestopedia.com

Link: https://www.investopedia.com/microsoft-msft-believes-tech-giants-should-pay-for-news-5112432

Discussion points:

1) How do you get your news?

2) Do you live in what the article calls a “news desert?” Are these “deserts” a threat to democracy??

3) In Wiley’s Financial Accounting: Tools for Business Decision-Making, we see an interesting problem P13.8B that deals with some other policy differences between Alphabet (Google’s parent company) and Microsoft. Answer part “b.” of the problem: that is, “Why do you think Microsoft has paid dividends while Google has not?”

Posted February 15th, 2021 by Brent White & filed under Marketing & Strategy.

Description: Despite the tough times for many businesses during the pandemic, Under Armour showed strong quarterly results in recent reporting, with revenue exceeding expectations. Under Armour, like some of its competitors in the athletic wear segment, is trying to take advantage of the workout at home boom in a time of social isolation. E-commerce sales were up about 25% during the quarter, contributing to the positive news.

Date: February 9, 2021

Source: globeandmail.com

Link: https://www.theglobeandmail.com/business/international-business/us-business/article-under-armour-shares-jump-as-rising-online-sales-power-revenue-past/?utm_medium=email&utm_source=Top%20Business%20Headlines&utm_content=2021-2-10_7&utm_term=&utm_campaign=newsletter&cu_id=hqdudQDKX1hVyFVKvyr3ag%3D%3D

Discussion points:

1) Have you purchased any Under Armour products online?

2) What is your opinion about Under Armour’s recent marketing strategies?

3) In Wiley’s Financial Accounting: Tools for Business Decision-Making, we see a practice case on pages 6-31 and 6-32 regarding Under Armour’s inventory management and overall liquidity. Do some research and answer part “b.” of the problem using the financial information from the most recent two fiscal years.

Posted February 8th, 2021 by Brent White & filed under Accounting Principles.

Description: E3 Metals Corp. from Calgary is exploring a technique to remove lithium from Alberta’s old oil wells. E3 is testing methods to extract this valuable mineral, a key component in batteries for electric cars. Lithium prices are somewhat volatile, with price gains of 40% in January. With the electric vehicle market experiencing growth, E3’s timing could be right.

Date: February 5, 2021

Source: financialpost.com

Link: https://financialpost.com/commodities/mining/meet-the-company-thats-looking-to-mine-lithium-from-albertas-old-oil-and-gas-wells

Discussion points:

1) Do you know anyone with an electric vehicle? Would you consider buying one yourself after graduation?

2) Would you be willing to invest in E3 or a similar company in the lithium extraction business?

3) In Wiley’s Financial Accounting: Tools for Business Decision-Making, we learn about the differences between research expenses and development costs. (See page 9-26.) How should E3 be accounting for its current spending on the lithium extraction – i.e. research expenses or development costs?

Posted February 8th, 2021 by Brent White & filed under Accounting Careers, Corporate Social Responsibility.

Description: Stakeholder Capitalism: It’s a term coined by a key figure from the annual World Economic Forum in Davos. Stakeholder Capitalism is supposed to represent a new approach for business, one that extends responsibility beyond the shareholders. But some are questioning the nature of the commitment following news that consulting giant, McKinnsey & Company, is paying close to $600 million for helping Purdue Pharma “supercharge” its sales of opioids. McKinnsey’s former leader was a big promoter of the Stakeholder Capitalism concept. In the wake of this news, and other corporate controversies, one could question where responsibility to the stakeholders really starts and ends.

Date: February 5, 2021

Source: thestar.com

Link: https://www.thestar.com/business/2021/02/06/mckinseys-role-in-opioid-scandal-happened-under-a-boss-who-led-the-charge-for-stakeholder-capitalism-now-hes-our-ambassador-to-china.html

Discussion points:

1) Are you familiar with the concept of stakeholder capitalism?

2) Does our approach to accounting make it difficult to pursue stakeholder capitalism?

3) In Chapter One of Wiley’s Auditing: A Practical Approach, we can read about auditors providing assurance for reporting on corporate social responsibility. What would be some of the key things an auditor would need to consider for an engagement where the subject matter was corporate social responsibility?

Posted February 8th, 2021 by Brent White & filed under Corporate Social Responsibility, Managerial Accounting.

Description: The Province of Quebec is reexamining its legislation for workplace injuries. The current act dates back as far as 1979, when Quebec had a much larger percentage of workers in manufacturing and industry. Some are urging the government to do better by expanding the proposed legislation to include twenty-first century issues like burnout of service workers and repetitive strain injuries, such as carpal tunnel syndrome.

Date: February 5, 2021

Source: cbc.ca

Link: https://www.cbc.ca/news/canada/montreal/quebec-burnout-workplace-safety-1.5899738

Discussion points:

1) What do you think of the proposal to include burnout in the new rules?

2) The article says business groups say the move to include burnout would raise employers’ already high premiums for health and safety, and, that “burnout” is not even a term included by the American Psychiatric Association in its descriptions of mental illness. How would you respond to this as a representative of a union organization?

3) In Wiley’s Managerial Accounting: Tools for Business Decision-Making, we find a section on cost behaviour analysis in Chapter 2, along with several important cost definitions. How would you classify the costs of these increased premiums to Quebec companies?

Posted February 1st, 2021 by Brent White & filed under Financial Accounting.

Description: The Hudson’s Bay Company, Canada’s oldest company, has announced the permanent layoff of 600 employees. With the pandemic’s negative effect on traditional retailers, and with half of its stores shuttered for now, the Bay appears to have taken this move to reduce costs. One thing that concerns HBC is that big box retailers – its competitors on certain lines of merchandise – are allowed to remain open while the Bay has to close some of its stores.

Date: January 30, 2021

Source: cbc.ca

Link: https://www.cbc.ca/news/canada/toronto/hudson-s-bay-layoffs-workers-canada-1.5894922?cmp=rss

Discussion points:

1) What do you think of the rules that force some retailers to remain closed during the pandemic while those selling groceries (along with non-essential items) are allowed to remain open?

2) The article contains a discussion from an employment lawyer noting that the terminated employees may have to be compensated for “payment in lieu of notice.” Research this topic to see what this means and discuss how HBC might have to account for it.

3) In Wiley’s Financial Accounting: Tools for Business Decision-Making, we find a reference to HBC’s longevity on page 11-4. How long has the company been in business? Can you find examples of any other Canadian companies that are close?

Posted February 1st, 2021 by Brent White & filed under Auditing.

Description: A CBC report this past week highlighted a flaw in the system of appointments for auditors general in the province of New Brunswick. Since the Office of the Auditor General was restored in the 1960s, four of the seven auditors general went directly to the auditor’s chair from the comptroller’s position. This creates problems with the appearance of independence, and, in accounting, independence in appearance is just as important as independence in fact. Former provincial Minister of Finance, Dr. Norm Betts, calls the legislation “archaic” and he urges improvements before the next appointment.

Date: January 25, 2021

Source: cbc.ca

Link: https://www.cbc.ca/news/canada/new-brunswick/auditor-general-appointments-independence-conflict-1.5884424

Discussion points:

1) If you were designing an appointment system for a new auditor general, what would you do?

2) Why do you think New Brunswick has had this issue for the majority of its appointments whereas other provinces rarely seem to have made a similar appointment from inside the civil service?

3) In Wiley’s Auditing: A Practical Approach we read about the five threats to independence. Which of the threats might pose a problem for a comptroller who becomes an auditor general?