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Accounting > StudyNotesExcelforInputToBrainscape > Flashcards

StudyNotesExcelforInputToBrainscape Flashcards

1
Q

Four methods of company valuation

A

Single Period Earnings, Multiple Period Earnings, PE Multiple, Relative Valuation

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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

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3
Q

Multiple Period Earnings valuation in Excel

A

pv(.10, 500, 1000)

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4
Q

Single Period earning example in Excel

A

1000/.10

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5
Q

Retractable Bonds

A

Holder can sell these back to the company before maturity

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6
Q

Convertible bonds

A

Can be converted into common shares at pre-determined price

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7
Q

Extendible bonds

A

Can extend the maturity of the bond

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8
Q

Cash Flow - end of period consideration

A

Salvage value of assets should be considered

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9
Q

Find the implicit rate of lease in Excel

A

rate(30,-66000,1500000)

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10
Q

Other items to consider with positive NPV

A

Management needs, & financing needs

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11
Q

Which preferred shares are considered debt?

A

When they have redemption priveleges

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12
Q

NPV in excel is

A

NPV(.15, 200,200,200,200, 200)

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13
Q

Debt ot Equity is

A

Liabilities / Equity

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14
Q

Accounting treatment of convertible bonds

A

liability & equity components recorded separately

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15
Q

Current Ratio

A

current assets / current liabilities

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16
Q

Quick Ratio

A

Current assets less inventory / current liabilities

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17
Q

Inventory Turnover

A

COGS / avg inventory

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18
Q

Debt Ratio

A

Liabilities / Assets

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19
Q

Gross Profit Margin

A

(Sales - Gogs)/ Sales

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20
Q

Operating Margin

A

EBIT / Sales

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21
Q

Net profit Margin

A

Net profit / Sales

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22
Q

ROA (Return on Assets)

A

Net profit / Assets

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23
Q

ROI (Return on Investment)

A

Net profit / S. Equity

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24
Q

PE Ratio

A

Price per common share / Earnings per common share

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25
Q

WACC

A

Formula = debt/total liab & equity * cost of Debt * (1 - t) + equity/total liab & equity * expected Return on Equity

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26
Q

Objective of an Audit

A

To collect sufficient and appropriate evidence in order to provide an opinion on whether managements assertions about FS are materially fair

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27
Q

Trust return is due

A

90 days after year end

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28
Q

Late tax penalty

A

5% of unpaid tax + 1% for each full month (to 12 months)

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29
Q

CRA can reassess for how long?

A

7 years if no fraud involved

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30
Q

How long for corp Notice of Objection?

A

90 days from notice of assessment

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31
Q

How long for pers Notice of Objection?

A

1 year from due date or 90 days from NOA

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32
Q

Does income allocated to partners keep its form?

A

Yes

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33
Q

Does income allocated from a trust keep its form?

A

Yes

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34
Q

Do losses allocated from a trust keep their form?

A

No - losses cannot be allocated from a trust

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35
Q

Testamentary trusts - only one can be a

A

Graduated rate estate

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36
Q

How long does a graduated rate estate exist?

A

36 months

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37
Q

What are trust year ends? (except grad rate estates)

A

31-Dec

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38
Q

What is the top personal federal tax rate?

A

33%

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39
Q

Non residents taxed on which income?

A

Cdn employment, Cdn business, and C.G on dispositions of taxable Canadian Prop. and taxes witheld on rent, dividends, pension, & rrsp

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40
Q

Taxable Canadian Property is

A

real property, business assets, and shares in Cdn resource companies

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41
Q

Resident? Immediate family members in Canada

A

yes

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42
Q

Resident? Owns or rents a home in Canada

A

yes

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43
Q

Tax Implications: Becoming a resident

A

Deemed disposition of all property (other than TCP)

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44
Q

Tax Implications: Becoming a non-resident

A

Deemed disposition of all property (other than TCP & pensions)

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45
Q

Tax Imp. : Non-Res Disposal of Taxable Canadian Property

A

Witholding tax of 25%

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46
Q

Corporation resident of Canada? (Two factors)

A

Incorp in Canada and Mind and Management of Board

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47
Q

Carry back and forward of non-capital losses

A

3 years and 20

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48
Q

Carry back of net capital losses

A

3 years and indefinitely

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49
Q

Affiliated

A

yourself, your spouse, corp you control

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50
Q

Tax imp: Disposition toan affiliated person

A

capital losses are deemed to be zero

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51
Q

Related

A

self and spouse and children, grand children, and siblings - NOT cousings, aunts, uncles, neph

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52
Q

Tax imp: Non-monetary transactions

A

occur at the FMV of the assets transferred

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53
Q

Tax imp: health and dental

A

deducted by company - not taxable to employee

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54
Q

Tax imp: Gifts

A

disposed of and acquired at FMV

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55
Q

Tax imp: Disability insurance paid by employer

A

proceeds are taxable

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56
Q

Tax imp: Disability insurance paid by employee

A

proceeds are not taxable

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57
Q

Tax imp: foreign currency revenue & expenses

A

translated at average exchange rate

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58
Q

Tax imp: foreign currency for a transaction

A

translated at daily exchange rate

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59
Q

Tax Imp: warranty reserve or contingent liabilities

A

non deductible

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60
Q

Tax Imp: allowance for bad debts & unearned revenue

A

deductible

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61
Q

Tax Imp: recreational facilities and club dues for employees

A

non deductible

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62
Q

Tax Imp: bonuses

A

must be paid within 180 days to be deductible

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63
Q

Tax Imp: goodwill writedowns

A

non deductible

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64
Q

Tax Imp: impairment of assets

A

non deductible

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65
Q

Tax Imp: stock option expense

A

non deductible

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66
Q

Classes with no half net rule

A

12 and 14

67
Q

Class 14

A

Limited life intangible assets - straight line over life

68
Q

Class 12

A

100% - no half net - small tools under $500

69
Q

Class 53

A

Manufacturing equipment - 50%

70
Q

Class 8

A

20% for equipment

71
Q

Class 10

A

Vehciles under 30,000 30%

72
Q

Class 10.1

A

Vehicles over 30,000 30%

73
Q

Class 50

A

Computer equipment at 55%

74
Q

Class 14.1

A

Goodwill and other CEC at 5% (new for 2017)

75
Q

Tax Impl: Financing related - legal, accoutning, banking, etc

A

one fifth of expenditure deductible over next five years

76
Q

Gross up on eligible dividends and tax credit

A

38 percent and 6 11ths of the gross up

77
Q

Gross up on inelegible or regular dividends

A

17% and 21 29ths of the gross up

78
Q

Max pensionable earnings for cpp (2016)

A

54900 less 3500 exemption

79
Q

Tax Impl: CPP on self employment income

A

pay both employee and employer - get deduction and tax credit respectively

80
Q

When is a benefit taxable?

A

Primarily when it is not for the benefit of the employer

81
Q

Self Employed vs Employed

A

control, tools, risk vs wage, dependency on single employer, evaluation job vs time

82
Q

Tax Impl: Personal use of company vehicle more than 50%

A

2% (or 2/3 of lease p) x value x months avail + operating of .26 * pers. Km.

83
Q

Tax Impl: Personal use of company vehicle less than 50%

A

personal km/20004 * SC + operating of 1/2 SC

84
Q

Tax Impl: Non CCPC stock options

A

inclusion when exercised - if non in money and arms length then 1/2 deduction

85
Q

Tax Impl: CCPC stock options and Arms Length

A

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
Q

ACB of shares after stock options exercised

A

exercise price plus income inclusion (might only be half)

87
Q

Can Goodwill be internally generated? (why or why not?)

A

No - Neither identifiable nor separable

88
Q

PP&E - IFRS - Valuation

A

CHOICE of Cost or Revaluation (Increase to OCI of greater than loss)

89
Q

Tax Impl: Low interest loan to employees

A

Interest rate lower than prescribed will be a taxable benefit

90
Q

Tax Impl: Low interest loan to employees - exception

A

Up to $25,000 for dwelling 40km closer to work - benefit can be deducted

91
Q

Tax Impl: First time home buyer

A

$25000 of RRSP (each) withdrawn tax free - 1/15 to be paid back each year

92
Q

Tax Impl: Lifelong Learning Plan

A

$10000 per year of RRSP (to 20k) - withdrawn tax free - 1/10 to be paid back each year

93
Q

Contribution room for RRSP is

A

either 18% of earned income OR ~ 26,000 plus previous room

94
Q

Home Office - Reg Employees

A

No mort interest, prop tax, or insurance

95
Q

Home Office - Comm Employees

A

No mort interest

96
Q

Childcare Max

A

2/3 of earned income OR 8k for under 6 and 5k for 7 to 16 and 200 and 125 per week

97
Q

Age Credit

A

Available if 65 or over - $7,125 reduced by net income in excess of ` $36,000

98
Q

Pension Credit

A

Lesser of $2000 and eligible pension income - can be transferred to spouse

99
Q

Personal

A

11474

100
Q

Spousal or Equivalent to Spouse

A

any dependent (child under 18) or parent/grandparent or impaired persons reduced by income

101
Q

Fitness Tax Credit

A

500 max in 2016 - gone in 2017

102
Q

Arts Tax Credit

A

250 max in 2016 - gone in 2017

103
Q

Home Accessibility Tax Credit

A

up to 10000 of eligible expenses

104
Q

Teacher Supply Tax Credit

A

up to 1000

105
Q

Family Caregiver Amount

A

Additional 2,121 for person wih impairment (either on equiv to spouse, caregiver, or elig dependent credits)

106
Q

Canad Employment Credit

A

Up to 15% of income up to income or 1,161

107
Q

Adoption Credit

A

15% of $15.255 per child

108
Q

Medical Expense Threshold

A

3% of net income or $2,237

109
Q

Charitable Super Credit

A

First time donors adds 25% of up to 1000 to regular credit

110
Q

Restriction to charitable donations credit

A

75% of net income

111
Q

Tax Impl: Gift of public shares to a charity

A

reduces CG from half to nil

112
Q

Refundable Medical Expense Supplement

A

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
Q

Public Transit Tax credit - terms

A

must be monthly or longer

114
Q

Disability amount (with DTC)

A

8,001 - can be transferred to person claiming individual as dependent

115
Q

Disability supports deduction

A

if impairment - these are amounts paid for devices to help work or go to school

116
Q

Disability Supplement

A

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
Q

EI tax credit

A

amounts paid - maximum of 50,800

118
Q

Wokring Income Tax Benefit (REFUNDABLE)

A

~$1000 for an individual making from 7,000 to 11,300 then reduced (~ 1800 family from 10,250 to 15,650)

119
Q

Political Donations

A

3/4 of first 400, 1/2 of next 350, 1/3 of next 525

120
Q

OAS clawback limit

A

Net income is greater than 73,756

121
Q

What is meant by Property income?

A

Passive income such as rental, interest, and dividend income

122
Q

GRIP is accumulated at what rate?

A

72% on income without special tax treatment

123
Q

Tax implications: CCPC receives an elgible dividend

A

increases GRIP account, brought in as income but then deducted

124
Q

Tax impications: shareholder receives low interest loan

A

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
Q

TFSA room as of 2017

A

over 50,000

126
Q

When is a gain on an asset considered to be business income?

A

When the intention was to sell the asset. (it is then inventory)

127
Q

Capital Gains Reserve

A

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
Q

Principle residence examption

A

(1 + number of years designated) / Total years of ownership x capital gain

129
Q

Tax Imp: Change in use of property

A

deemed disposition at FMV - unless from princ residence to rental

130
Q

Listed Personal Property: carry back and forward

A

3 years and 7 (only on other LPP)

131
Q

Listed Personal Property: Minimum ACB and POD

A

$1,000

132
Q

Replacement Property Rules on Volunatry Disposition

A

Defer recapture or capital gains - land and building in new business within 1 year

133
Q

Replacement Property Rules on Involunatry Disposition

A

Defer recap and CG for all capital assets - must be purchased within 2 years

134
Q

Eligible small bus corp shares?

A

from small business corp, are treasury shares and assets not over $50m

135
Q

Tax Impl: Disposition of Eligible small business shares

A

deferral of capital gains if PoD used to purchase other eligible shares

136
Q

Qualified small business corp shares (QSBC)

A

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
Q

Tax Impl: Disposition of Qualified small business shares (Gain)

A

Use of lifetime capital gains deduction ($824 000 indexed for inflation)

138
Q

Tax Impl: Disposition of small business corp (SBC) shares (Loss)

A

Loss is 1/2 allowable as an ABIL - can be used against any source of income - reduced with capital gains exemption

139
Q

Tax Impl: Shareholder loan paying interest at prescribed rate

A

No implications

140
Q

How does pension income splitting work

A

Any eligible pension income can be split with a spouse

141
Q

Tax implication: lending or gifting assets to spouse or minors

A

Any CG & income attributes from spouse and any income attributes form minors

142
Q

Tax implication: minor child receiving dividends from private co.

A

minor child reports the income and is taxed at top marginal rate

143
Q

When is property income deemed to be active business income?

A

More than 5 full time employees or associated corp can deduct the amount

144
Q

Annual business limit of $500,00 deduction available to:

A

CCPCs with taxable capital of less than $10m (10-15m it decreases)

145
Q

Companies are associated when

A

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
Q

Why not use a Personal Service Business?

A

It is taxed at 33%

147
Q

GRR & M&P deduction

A

13% on any income not given special treatment

148
Q

Tax Implication: Canadian dividend earned by public company

A

Income then deducted

149
Q

Tax Imp: Canadian divident earned by private company

A

Income then deducted - part IV tax (1/3) is paid - amount is added to RDTOH

150
Q

Connected companies:

A

One controls the other or owns greater than 10 percent

151
Q

Tax Imp: Canadian dividends earned by connected company

A

Income then deducted - part IV tax of ownership * dividend refun generated - added to RDTOH

152
Q

Aggregate Investment Income is

A

Taxable capital gains and interest, rental, and investments

153
Q

Tax Imp: Investment Income

A

Additional 6 and 2/3% tax (with 26 and 2/3 added to RDTOH account)

154
Q

RDTOH: Public Companies or CCPCs?

A

CCPCs

155
Q

Capital Dividend Account: Public Companies or CCPCs?

A

CCPs

156
Q

How is a capital dividend deemed?

A

An election is made

157
Q

CDA consists of:

A

Tax fee portion of capital gains, tax free life insurance proceeds received, capital dividends received

158
Q

Tax Impl: Windup of a CCPC

A

Pay out CDA and issue dividends to take care of RDTOH

159
Q

Tax Implications of Scientific Research and Development

A

Deductible as expenses but alo get a 15% federal or 35% CCPC REFUNDABLE tax credit (up to 3 million per year)

160
Q

Tax Impl: PUC reduction

A

Free to tax payer - reduces pUc and reduces ACB

161
Q

Tax Impl: Share Redemption for CCPC

A

PoD - PUC = Deemed Dividend AND PoD - Deemed Dividend = Adjusted PoD, less the ACB = C.G

162
Q

Section 22 can be used for A/R when:

A

substantially all (90% or more) of the property used in the business is sold AND purchaser will carry on business (creates business loss)

163
Q

Section 22 drawback

A

purchaser must include the loss in income (but then can take a reserve)

Accounting (14 decks)

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