Wiley Accounting Updates

Posted March 25th, 2019 by Brent White & filed under eCommerce.

Description: An Alberta resident, David Jackel, has taken on Airbnb and won. Jackel had planned a Mexican holiday that included five weeks at a condo rented through Airbnb. But even though he had arranged the rental six months before his vacation, with just a scant three days to go before check-in, the online giant pulled the plug on the reservation. They did offer a couple of other properties, but neither were what Jackel was after. Jackel booked other lodging, leaving him about $6,400 over budget for his dream trip. After months of back and forth between the company and Mr. Jackel, Marketplace, a CBC consumer affairs program, put in a call to Airbnb on his behalf. Within a very short time, Jackel received good news that a refund was on the way.

Date: March 22, 2019

Source: cbc.ca

Link: https://www.cbc.ca/news/business/airbnb-last-minute-cancellations-marketplace-1.5065309

Discussion points:

1) Have you ever faced a last-minute cancellation from Airbnb or a similar service? What happened?

2) In this situation we saw a refund shortly after the CBC Marketplace program made the inquiry. Do you think the two events are related?

3) Chapter 9 In Wiley’s Financial Accounting: Tools for Business Decision-Making talks about the value of a trademark like Airbnb. Do you think the Marketplace publicity could impact the trademark’s value?

Posted March 25th, 2019 by Brent White & filed under Canadian Economy, Canadian Government.

Description: This past week our federal government introduced its budget for the next fiscal year. There were some interesting initiatives, including a possible grant to first-time home-owners from the Canada Mortgage and Housing Corporation and some early steps towards a national pharmacare program. But what wasn’t there is also quite interesting: the government is planning a deficit for this year and the next several, in contrast an earlier promise to return to surpluses before this fall’s election.

Date: March 22, 2019

Source: globalnews.ca

Link: https://globalnews.ca/news/5075888/federal-budget-2019-cmhc-shared-equity-mortgage/

Discussion points:

1) Have you discussed the federal budget in any of your classes?

2) What is your opinion about deficit financing?

3) Chapter 7 in Wiley’s Financial Accounting: Tools for Business Decision-Making talks about cash budgeting and planning major expenditures. What might be some of the challenges you would have if you were planning the cash budgets for the federal government?

Posted March 18th, 2019 by Brent White & filed under Ethics, Student life.

Description: Did you hear the news this past week about the college entrance scam? About 50 people – including an Academy Award nominee – were arrested in the United States for their roles in gaming the admissions system at elite schools, all with the aid of William Rick Singer. Singer, in exchange for healthy sums of cash, helped the students get into top schools by either cheating on entrance tests like the SATs or by getting sport coaches to declare that the prospective students were athletic recruits. The parents could then claim their payments to Singer as tax deductions since the cash was funnelled through a so-called charitable foundation.

Date: March 13, 2019

Source: cnn.com

Link: https://www.cnn.com/2019/03/12/us/college-admissions-scheme-how-it-worked/index.html

Discussion points:

1) How would feel if you found out your parents had gamed the admissions process to get you into college?

2) In an ethics case we often discuss “stakeholders.” Which stakeholders have been impacted adversely by this situation?

3) The feature story at the start of Chapter 4 in Wiley’s Financial Accounting: Tools for Business Decision-Making talks about the work of Controller Carter Scott at Western University in London, Ontario. Are there any controls a Canadian university could establish to prevent or detect such a fraud?

Posted March 18th, 2019 by Brent White & filed under Financial Reporting and Analysis.

Description: Debt on your credit cards can be a common way to sink your financial plan. But university students are often targeted by those marketing credit cards. If you want to use this form of credit – and its pretty hard to avoid it in our time – you should know some common myths about this way of borrowing. Myth number one, as the story says: “A lender will only lend me what I can afford to repay”

Date: March 11, 2019

Source: theprovince.com

Link: https://theprovince.com/opinion/columnists/myths-about-debt-payments-debunked-and-explained

Discussion points:

1) Have you picked up a credit card since you have started university?

2) Which of the “myths” surprised you the most? Why?

3) Page 413 in Wiley’s Financial Accounting: Tools for Business Decision-Making has feature story on Canadian Tire. Read through this story to determine where credit cards rank in the composition of Canadian Tire’s accounts receivable.

Posted March 18th, 2019 by Brent White & filed under Canadian Government.

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

Source: cbc.ca

Link: https://www.cbc.ca/news/politics/lifelong-learning-accounts-budget-1.5056828

Discussion points:

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?

Posted March 11th, 2019 by Brent White & filed under Accounting Careers, Student life.

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

Source: cbc.ca

Link: https://www.cbc.ca/news/business/solo-living-business-opportunities-1.5046913

Discussion points:

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?

Posted March 11th, 2019 by Brent White & filed under Personal Tax.

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

Source: cbc.ca

Link: https://www.cbc.ca/news/canada/kitchener-waterloo/carbon-tax-pricing-ontario-federal-1.5043558

Discussion points:

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?

Posted March 11th, 2019 by Brent White & filed under Taxation & Planning.

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

Source: finanlcialpost.com

Link: https://business.financialpost.com/news/fp-street/0308-biz-gz-taxes-its-clear-that-banks-are-benefitting-from-the-lower-u-s-tax-rate-but-by-how-muchh

Discussion points:

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?

Posted March 6th, 2019 by Brent White & filed under IPO.

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

Source: thestar.com

Link: https://www.thestar.com/news/world/us/2019/03/01/lyft-reveals-financial-details-ahead-of-its-ipo.html

Discussion points:

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.

Posted March 4th, 2019 by Brent White & filed under Taxation.

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

Source: cbc.ca

Link: https://www.cbc.ca/news/canada/nova-scotia/cape-breton-cra-fraud-case-1.5032725

Discussion points:

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?