StudyNotesExcelforInputToBrainscape Flashcards
1
Q
Four methods of company valuation
A
Single Period Earnings, Multiple Period Earnings, PE Multiple, Relative Valuation
2
Q
PE Multiple example
A
eg. $275 per share, with EPS of $10; = PE Multiple of 27.5; times SIMILAR company’s earnings = value of all shares
3
Q
Multiple Period Earnings valuation in Excel
A
pv(.10, 500, 1000)
4
Q
Single Period earning example in Excel
A
1000/.10
5
Q
Retractable Bonds
A
Holder can sell these back to the company before maturity
6
Q
Convertible bonds
A
Can be converted into common shares at pre-determined price
7
Q
Extendible bonds
A
Can extend the maturity of the bond
8
Q
Cash Flow - end of period consideration
A
Salvage value of assets should be considered
9
Q
Find the implicit rate of lease in Excel
A
rate(30,-66000,1500000)
10
Q
Other items to consider with positive NPV
A
Management needs, & financing needs
11
Q
Which preferred shares are considered debt?
A
When they have redemption priveleges
12
Q
NPV in excel is
A
NPV(.15, 200,200,200,200, 200)
13
Q
Debt ot Equity is
A
Liabilities / Equity
14
Q
Accounting treatment of convertible bonds
A
liability & equity components recorded separately
15
Q
Current Ratio
A
current assets / current liabilities
16
Q
Quick Ratio
A
Current assets less inventory / current liabilities
17
Q
Inventory Turnover
A
COGS / avg inventory
18
Q
Debt Ratio
A
Liabilities / Assets
19
Q
Gross Profit Margin
A
(Sales - Gogs)/ Sales
20
Q
Operating Margin
A
EBIT / Sales
21
Q
Net profit Margin
A
Net profit / Sales
22
Q
ROA (Return on Assets)
A
Net profit / Assets
23
Q
ROI (Return on Investment)
A
Net profit / S. Equity
24
Q
PE Ratio
A
Price per common share / Earnings per common share
25
WACC
Formula = debt/total liab & equity * cost of Debt * (1 - t) + equity/total liab & equity * expected Return on Equity
26
Objective of an Audit
To collect sufficient and appropriate evidence in order to provide an opinion on whether managements assertions about FS are materially fair
27
Trust return is due
90 days after year end
28
Late tax penalty
5% of unpaid tax + 1% for each full month (to 12 months)
29
CRA can reassess for how long?
7 years if no fraud involved
30
How long for corp Notice of Objection?
90 days from notice of assessment
31
How long for pers Notice of Objection?
1 year from due date or 90 days from NOA
32
Does income allocated to partners keep its form?
Yes
33
Does income allocated from a trust keep its form?
Yes
34
Do losses allocated from a trust keep their form?
No - losses cannot be allocated from a trust
35
Testamentary trusts - only one can be a
Graduated rate estate
36
How long does a graduated rate estate exist?
36 months
37
What are trust year ends? (except grad rate estates)
31-Dec
38
What is the top personal federal tax rate?
33%
39
Non residents taxed on which income?
Cdn employment, Cdn business, and C.G on dispositions of taxable Canadian Prop. and taxes witheld on rent, dividends, pension, & rrsp
40
Taxable Canadian Property is
real property, business assets, and shares in Cdn resource companies
41
Resident? Immediate family members in Canada
yes
42
Resident? Owns or rents a home in Canada
yes
43
Tax Implications: Becoming a resident
Deemed disposition of all property (other than TCP)
44
Tax Implications: Becoming a non-resident
Deemed disposition of all property (other than TCP & pensions)
45
Tax Imp. : Non-Res Disposal of Taxable Canadian Property
Witholding tax of 25%
46
Corporation resident of Canada? (Two factors)
Incorp in Canada and Mind and Management of Board
47
Carry back and forward of non-capital losses
3 years and 20
48
Carry back of net capital losses
3 years and indefinitely
49
Affiliated
yourself, your spouse, corp you control
50
Tax imp: Disposition toan affiliated person
capital losses are deemed to be zero
51
Related
self and spouse and children, grand children, and siblings - NOT cousings, aunts, uncles, neph
52
Tax imp: Non-monetary transactions
occur at the FMV of the assets transferred
53
Tax imp: health and dental
deducted by company - not taxable to employee
54
Tax imp: Gifts
disposed of and acquired at FMV
55
Tax imp: Disability insurance paid by employer
proceeds are taxable
56
Tax imp: Disability insurance paid by employee
proceeds are not taxable
57
Tax imp: foreign currency revenue & expenses
translated at average exchange rate
58
Tax imp: foreign currency for a transaction
translated at daily exchange rate
59
Tax Imp: warranty reserve or contingent liabilities
non deductible
60
Tax Imp: allowance for bad debts & unearned revenue
deductible
61
Tax Imp: recreational facilities and club dues for employees
non deductible
62
Tax Imp: bonuses
must be paid within 180 days to be deductible
63
Tax Imp: goodwill writedowns
non deductible
64
Tax Imp: impairment of assets
non deductible
65
Tax Imp: stock option expense
non deductible
66
Classes with no half net rule
12 and 14
67
Class 14
Limited life intangible assets - straight line over life
68
Class 12
100% - no half net - small tools under $500
69
Class 53
Manufacturing equipment - 50%
70
Class 8
20% for equipment
71
Class 10
Vehciles under 30,000 30%
72
Class 10.1
Vehicles over 30,000 30%
73
Class 50
Computer equipment at 55%
74
Class 14.1
Goodwill and other CEC at 5% (new for 2017)
75
Tax Impl: Financing related - legal, accoutning, banking, etc
one fifth of expenditure deductible over next five years
76
Gross up on eligible dividends and tax credit
38 percent and 6 11ths of the gross up
77
Gross up on inelegible or regular dividends
17% and 21 29ths of the gross up
78
Max pensionable earnings for cpp (2016)
54900 less 3500 exemption
79
Tax Impl: CPP on self employment income
pay both employee and employer - get deduction and tax credit respectively
80
When is a benefit taxable?
Primarily when it is not for the benefit of the employer
81
Self Employed vs Employed
control, tools, risk vs wage, dependency on single employer, evaluation job vs time
82
Tax Impl: Personal use of company vehicle more than 50%
2% (or 2/3 of lease p) x value x months avail + operating of .26 * pers. Km.
83
Tax Impl: Personal use of company vehicle less than 50%
personal km/20004 * SC + operating of 1/2 SC
84
Tax Impl: Non CCPC stock options
inclusion when exercised - if non in money and arms length then 1/2 deduction
85
Tax Impl: CCPC stock options and Arms Length
income can be deferred until shares are sold AND if held for 2 years get 1/2 deduction OR not in money and arms length 1/2 deduction
86
ACB of shares after stock options exercised
exercise price plus income inclusion (might only be half)
87
Can Goodwill be internally generated? (why or why not?)
No - Neither identifiable nor separable
88
PP&E - IFRS - Valuation
CHOICE of Cost or Revaluation (Increase to OCI of greater than loss)
89
Tax Impl: Low interest loan to employees
Interest rate lower than prescribed will be a taxable benefit
90
Tax Impl: Low interest loan to employees - exception
Up to $25,000 for dwelling 40km closer to work - benefit can be deducted
91
Tax Impl: First time home buyer
$25000 of RRSP (each) withdrawn tax free - 1/15 to be paid back each year
92
Tax Impl: Lifelong Learning Plan
$10000 per year of RRSP (to 20k) - withdrawn tax free - 1/10 to be paid back each year
93
Contribution room for RRSP is
either 18% of earned income OR ~ 26,000 plus previous room
94
Home Office - Reg Employees
No mort interest, prop tax, or insurance
95
Home Office - Comm Employees
No mort interest
96
Childcare Max
2/3 of earned income OR 8k for under 6 and 5k for 7 to 16 and 200 and 125 per week
97
Age Credit
Available if 65 or over - $7,125 reduced by net income in excess of ` $36,000
98
Pension Credit
Lesser of $2000 and eligible pension income - can be transferred to spouse
99
Personal
11474
100
Spousal or Equivalent to Spouse
any dependent (child under 18) or parent/grandparent or impaired persons reduced by income
101
Fitness Tax Credit
500 max in 2016 - gone in 2017
102
Arts Tax Credit
250 max in 2016 - gone in 2017
103
Home Accessibility Tax Credit
up to 10000 of eligible expenses
104
Teacher Supply Tax Credit
up to 1000
105
Family Caregiver Amount
Additional 2,121 for person wih impairment (either on equiv to spouse, caregiver, or elig dependent credits)
106
Canad Employment Credit
Up to 15% of income up to income or 1,161
107
Adoption Credit
15% of $15.255 per child
108
Medical Expense Threshold
3% of net income or $2,237
109
Charitable Super Credit
First time donors adds 25% of up to 1000 to regular credit
110
Restriction to charitable donations credit
75% of net income
111
Tax Impl: Gift of public shares to a charity
reduces CG from half to nil
112
Refundable Medical Expense Supplement
Income between 3,514 and reduced by 5% over $26,645 (to 50,725) - lesser of $1,024 & 25% of medical expenses + disab supports
113
Public Transit Tax credit - terms
must be monthly or longer
114
Disability amount (with DTC)
8,001 - can be transferred to person claiming individual as dependent
115
Disability supports deduction
if impairment - these are amounts paid for devices to help work or go to school
116
Disability Supplement
if under 18 with DTC, supplement of 4,667 - reduced by amounts over 2,654 paid for attendant care and deducted as child care, disability, or medical
117
EI tax credit
amounts paid - maximum of 50,800
118
Wokring Income Tax Benefit (REFUNDABLE)
~$1000 for an individual making from 7,000 to 11,300 then reduced (~ 1800 family from 10,250 to 15,650)
119
Political Donations
3/4 of first 400, 1/2 of next 350, 1/3 of next 525
120
OAS clawback limit
Net income is greater than 73,756
121
What is meant by Property income?
Passive income such as rental, interest, and dividend income
122
GRIP is accumulated at what rate?
72% on income without special tax treatment
123
Tax implications: CCPC receives an elgible dividend
increases GRIP account, brought in as income but then deducted
124
Tax impications: shareholder receives low interest loan
included in income unless i) repaid within 1 year of year end ii) because of also being an employee, but less than 10% sharehold, has bonafide repayment arrangments OR does have more than 10% but uses loan for a dwelling, work auto, or trasury shares with reasonable arrangments to repay
125
TFSA room as of 2017
over 50,000
126
When is a gain on an asset considered to be business income?
When the intention was to sell the asset. (it is then inventory)
127
Capital Gains Reserve
When not all of PofD is received in the year of sale, then lesser of ( (proceeds recevbl / total) x CG ) or 1/5 each year (1/10 for taxpayers child)
128
Principle residence examption
(1 + number of years designated) / Total years of ownership x capital gain
129
Tax Imp: Change in use of property
deemed disposition at FMV - unless from princ residence to rental
130
Listed Personal Property: carry back and forward
3 years and 7 (only on other LPP)
131
Listed Personal Property: Minimum ACB and POD
$1,000
132
Replacement Property Rules on Volunatry Disposition
Defer recapture or capital gains - land and building in new business within 1 year
133
Replacement Property Rules on Involunatry Disposition
Defer recap and CG for all capital assets - must be purchased within 2 years
134
Eligible small bus corp shares?
from small business corp, are treasury shares and assets not over $50m
135
Tax Impl: Disposition of Eligible small business shares
deferral of capital gains if PoD used to purchase other eligible shares
136
Qualified small business corp shares (QSBC)
Three tests: (SBC) 90% more of fmv assets in active business or invested in shares of connected sbc AND shares owned by sh or related person for 24 months AND for the 24 months 50% of assets used in active business (also a modified - more complicated test)
137
Tax Impl: Disposition of Qualified small business shares (Gain)
Use of lifetime capital gains deduction ($824 000 indexed for inflation)
138
Tax Impl: Disposition of small business corp (SBC) shares (Loss)
Loss is 1/2 allowable as an ABIL - can be used against any source of income - reduced with capital gains exemption
139
Tax Impl: Shareholder loan paying interest at prescribed rate
No implications
140
How does pension income splitting work
Any eligible pension income can be split with a spouse
141
Tax implication: lending or gifting assets to spouse or minors
Any CG & income attributes from spouse and any income attributes form minors
142
Tax implication: minor child receiving dividends from private co.
minor child reports the income and is taxed at top marginal rate
143
When is property income deemed to be active business income?
More than 5 full time employees or associated corp can deduct the amount
144
Annual business limit of $500,00 deduction available to:
CCPCs with taxable capital of less than $10m (10-15m it decreases)
145
Companies are associated when
One company controls the other, if both companies are controlled by same person/group, two companies controlled by related people or groups and 25% cross ownership
146
Why not use a Personal Service Business?
It is taxed at 33%
147
GRR & M&P deduction
13% on any income not given special treatment
148
Tax Implication: Canadian dividend earned by public company
Income then deducted
149
Tax Imp: Canadian divident earned by private company
Income then deducted - part IV tax (1/3) is paid - amount is added to RDTOH
150
Connected companies:
One controls the other or owns greater than 10 percent
151
Tax Imp: Canadian dividends earned by connected company
Income then deducted - part IV tax of ownership * dividend refun generated - added to RDTOH
152
Aggregate Investment Income is
Taxable capital gains and interest, rental, and investments
153
Tax Imp: Investment Income
Additional 6 and 2/3% tax (with 26 and 2/3 added to RDTOH account)
154
RDTOH: Public Companies or CCPCs?
CCPCs
155
Capital Dividend Account: Public Companies or CCPCs?
CCPs
156
How is a capital dividend deemed?
An election is made
157
CDA consists of:
Tax fee portion of capital gains, tax free life insurance proceeds received, capital dividends received
158
Tax Impl: Windup of a CCPC
Pay out CDA and issue dividends to take care of RDTOH
159
Tax Implications of Scientific Research and Development
Deductible as expenses but alo get a 15% federal or 35% CCPC REFUNDABLE tax credit (up to 3 million per year)
160
Tax Impl: PUC reduction
Free to tax payer - reduces pUc and reduces ACB
161
Tax Impl: Share Redemption for CCPC
PoD - PUC = Deemed Dividend AND PoD - Deemed Dividend = Adjusted PoD, less the ACB = C.G
162
Section 22 can be used for A/R when:
substantially all (90% or more) of the property used in the business is sold AND purchaser will carry on business (creates business loss)
163
Section 22 drawback
purchaser must include the loss in income (but then can take a reserve)
