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Core 1 > Unit 6 > Flashcards

Unit 6 Flashcards

1
Q

Share Based Compensation Plan

A

Chapt 43
IFRS 2
ASPE 3870

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2
Q

What are the methods of measuring Share Option (SO) and Share Appreciation Rights (SAR)

A
  1. Equity method for
    * Share options
    * Share Appreciation Rights
  2. Cash method
    * Share Appreciation Rights
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3
Q

What are the features of the Equity method

A
  • It is measured at fair value using Option Pricing at grant date.
  • Not revalued over vesting period
    Diff betw SOs and SARs is that employees do not pay an option price to obtain SARs
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4
Q

How is the compensation expense calculated

A

(FV at grant date
x
% expected to be vested
x
Proportion of vesting period)
-
Current contributed surplus

Dr Compensation expense
Cr Contributed Surplus - Share options (or SARs)

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5
Q

How to derecognize using the Equity method - If exercised / Expired

A

Exercised
Dr Cash
Dr Contribution Surplus-SO (or SARs)
Cr Common Shares

If Expired
Dr Contribution Surplus-SO (or SARs)
Cr Contribution Surplus-Expired SO (or SARs)

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6
Q

What are the features of the Cash Method

A
  • FV using option - Pricing model at grant date
  • Revalue to FV at each reporting date
  • Only used for SARs
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7
Q

How is the compensation expense measured using the Cash Method

A

(FV
x
% expected to vest
x
Proportion of vesting period completed)
-
Current SAR liability

Dr Compensation expense
Cr SAR Liability

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8
Q

How to derecognize using the Cash method - If exercised / Expired

A

If redeemed
Dr SAR Liability
Cr Cash

If expired
Dr SAR liability
Cr Compensation expense

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9
Q

Difference ASPE/ IFRS

A

For cash settled SAR, ASPE uses intrinsic value and not FV

Intrinsic value = market value - exercise price

  • cannot be negative
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10
Q

Pension Plans & Other employee future benefits

A

Chapt 48
IAS 19
ASPE 3462

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11
Q

Defined Contribution Pension Plan

A

They are post employment benefit plans where an employer contributes a pre-established amt but has no liability as to the risk and performance of the fund.
- Entity pays a fixed contribution into another entity (fund) on behalf of employee
- Entity has no obligation to pay other fixed amount to employee on retirement
- Employee accepts risks associated with changes to the plan

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12
Q

How is DCPP recognized

A

In statement of comprehensive income
CSC- Current Service Cost - Amt employer is expected to contribute for the period for service provided by employee
PSC - Past service Cost granted in the period - and contributed by employer for past service of employee
Net interest cost on discounted CSC or PSC

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13
Q

How is DCPP measured

A

If contributions are due 12 months after the service is provided or past service granted, expense is recorded at the PV of future contributuions

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14
Q

What is Defined Benefit Plan

A
  • Future benefits to be paid out to employees on retirement are defined in the terms of the plan
  • Employer bears risks such as investment and actuarial risks
  • Defined benefit plan affects the f/s in several ways - SCI - P/L, OCI, SFP
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15
Q

What is DBO

A

The Defined Benefit Obligation is the present value of all future employee benefits estimated by the actuary to be paid. The account is tracked but not recorded in the financial statement.

Pension expense is recognized in each period that a defined benefit plan is in existense.

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16
Q

Difference IFRS Vs ASPE

A
  1. Actuarial gain /loss on DBO
    IFRS
    Immediate recognition in OCI
    ASPE
    Recognized in P/L in the period it occurs
  2. Acturial gain / loss on Plan Assets
    IFRS
    Immediate recognition in OCI
    ASPE
    Recognized in P/L in the period it occurs
17
Q

Defined Benefits JEs

A
  • Dr to net defined benefit asset/liabililty = cash remitted. It will always be a debit
  • Cr to NDB asset/liability - net pension expense. It will always be a credit
  • Dr /cr to net defined asset/liability = Net gain / loss
  • if there is net credit to OCI, entry in NDB asset/ liabilty will be a debit. And vice versa
18
Q

Tax Administration
- What chapter is this

A

Chapt 4

19
Q

What are important filing & notice deadlines

A

Filiing - Individual - April 30
Individual with biz - June 15
Deacesed - Filing deadline or 6 months after death, whichever is earlier

Corporate - 6 months after year end

Pay bal due Individual - Apr 30
Corporate - 2 mths after YE. Some CCPCs 3mths

To appeal NOA is later of
- 90 days after NOA
- One yr from the filing due date from the assement

To appeal notice of obj - 90 days after NOO date

Individuals have one yr from last Returns filing

20
Q

Personal Sources of Income What chapter is this

A

Chapt 5

21
Q

What are the steps to calcluate net income for tax purposes

A
  1. Determine the sources of income & expenses
  2. Calculate the income net of expenses
  3. Conclude on net income for the year
22
Q

What components are used to calculated income for tax purposes

A
  1. Net income
    - Net employment income
    - Net business income/loss
    - Net property income / loss
    - Other income
    Less
    1/2 capital gains net of 1/2 capital losses
    Less
    Other deductions
  • If result is > 0, use result. If result< 0, use 0
23
Q

Employee Vs Contractor
What chapter is that

A

Chapt 6
Taxation

24
Q

What are the criteria for testing relationship - Employee vs Contractor

A
  1. Intention
  2. Ownership of tools
  3. Control
  4. Financial risk
  5. Investment & Management
  6. Subcontract work or hire assistant
  7. Opportunity for profit
25
Q

Employment Income
What chapter is this

A

Chapt 7

26
Q

What are the steps to calculate net employment income

A
  1. Employment income
    - salary
    - wages
    - bonuses
    - gratuites
    - tips
    ADD
  2. Taxable benefits and other payments
    - Allowances
    - Board of directors payments
    - Gifts & awards
    - Recreational facilities / club dues
    - Severance package
    - Life insurance
    DEDUCT
  3. Allowed deductions (common)
    - Sales person expenses
    - Travel expense
    - Motor vehicle expense
    - CCA
    - Work space in home
    - Employee RPP
    - Professional dues
27
Q

Who claims child care expense

A
  • Supporting partner with lower income
  • If the higher is in hospital, the lower can claim for the period
28
Q

Who claims child and spousal support

A
  • The spouse making the payment can deduct from income but child suport takes priority
  • This is subject to a maximum amount
29
Q

What is the basis for workspace in the home calculation

A

An employee earning
- Regular base salary and
- Commission can
Deduct pro rata portion of
-Property tax
- Home insurance and
- Home office expenses allowed for those that are not paid commission

30
Q

Property Income

A

Chapt 10

31
Q

What is property income

A

Property income is returns on invested capital as long as the owner does not commit significant time and labour to the income generating process.The various sources include Rent, Dividend & Interest income

32
Q

How to calculate taxable rental income

A
  • Rental income less eligible rental expenses
  • CCA = UCC x CCA rate%
  • ## Deduct CCA from the net rental income to get taxable rental income
33
Q

How is dividend income for Individuals or Trusts taxed

A

Amount to include in taxable income

  • Eligible dividend is grossed up by 38%. The tax credit is 6/11 of the grossed up figure
  • Ineligible is grossed up 15% Tax credit is 9/13 of the grossed up figure
  • Capital dividend - paid out of capital dividend account - CDA
  • Foreign dividend - not grossed up but converted to full CAD
34
Q

Deductions from property income

A
  1. Carrying charges on vacant land - interest on loan, property taxes . Deductible to the extent of income earned on the land. Otherwise add to cost of land.
  2. Soft costs - interest, legal, accounting, insurance, prop taxes
    * Must be able to tie use of funds to income producing assets
35
Q

Taxable Income for an individual

A

Chapt 14

36
Q

Steps to taxable income

A

Net Income for tax purposes
Less Div C Deductions
- Employee stock options
- Non-capital losses
- Farm losses
- ABILs carried ff or back
- Net capital loss
- Lifetime Capital Gains Deduction
- Deductions for GIS, Welfare WComp included in net income

=
Taxable Income

Core 1 (8 decks)

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