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Brief Contents
Preface xi
CHAPTER 9 Property, Plant, and Equipment and Intangibles 604

CHAPTER 10 Current Liabilities 693
CHAPTER 11 Partnerships 751
CHAPTER 12 Organization and Operation of Corporations 800
CHAPTER 13 Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings 863
CHAPTER 14 Bonds and Long-Term Notes Payable 916
CHAPTER 15 Accounting for Debt and Share Investments 986
CHAPTER 16 Reporting and Analyzing Cash Flows 1026
CHAPTER 17 Analyzing Financial Statements 1104
APPENDIX I Payroll Liabilities A-1
APPENDIX II Financial Statement Information A-2
APPENDIX III Chart of Accounts A-24
vi
Contents
Preface xi Concept Review Questions 657
Quick Study 657
Exercises 661
CHAPTER 9
Problems 671
Property, Plant, and Equipment and Alternate Problems 680
Intangibles 604 Analytical and Review Problem 689
Property, Plant, and Equipment (PPE) 606 Ethics Challenge 690
Cost of PPE 608 Focus on Financial Statements 690
Subsequent Expenditures 608 Critical Thinking Mini Case 692
PPE Subledger 610
Low-Cost Asset Purchases 610
CHAPTER 10
Land 611
Current Liabilities 693
Land Improvements 611 Characteristics of Liabilities 695
Buildings 612 Defining Liabilities 695
Leasehold Improvements 612 Classifying Liabilities as Current or Non-Current 695
Machinery and Equipment 613 Current Liabilities 696
Lump-Sum Asset Purchase 613 Non-Current Liabilities 696
Depreciation 614 Current Portion of Long-Term Debt 697
Reporting Depreciation on Assets 615 Balance Sheet Presentation of Current Liabilities 698
Known (Determinable) Liabilities 700
Factors in Calculating Depreciation 616
Trade Accounts Payable 700
Depreciation Methods 618
Payroll Liabilities 700
Partial-Year Depreciation 626
Provincial Sales Tax (PST), Federal Goods and Services Tax
Revising Depreciation Rates 628
(GST) Payable, and Harmonized Sales Tax (HST) 701
Impairment of PPE Assets 632
Unearned Revenues 706
Mid-Chapter Demonstration Problem 634
Solution 635 Solution 708
Disposals of PPE 637 Current Notes Payable 709
Discarding PPE 637 Estimated Liabilities (or Provisions) 711
Selling PPE 638 Customer Awards/Loyalty Programs 712
Exchanging PPE 639 Warranty Liabilities 714
Intangible Assets 641 Income Tax Liabilities for Corporations 716
Accounting for Intangible Assets 641 Contingent Liabilities 717
Patents 642 Summary 719
Copyrights 643 Demonstration Problem 720
Mineral Resources 643 Solution 721
Trademarks and Brand Names 643 Glossary 723
Leaseholds 644 Knowledge Check-Up 724
Goodwill 644 Concept Review Questions 725
Summary 646 Quick Study 726
Demonstration Problem 649 Exercises 728
Solution 650 Problems 735
Appendix 9A Revised Depreciation When Alternate Problems 740
There Is a Betterment That Creates Partial-Period Ethics Challenge 745
Depreciation 652 Focus on Financial Statements 746
Glossary 654 Critical Thinking Mini Case 747
Knowledge Check-Up 656 Comprehensive Problem 748
vii
CONTENTS
CHAPTER 11 Dividends 818

Partnerships 751 Cash Dividends 818
Special Features of Preferred Shares 820
Partnership Form of Organization 753 Dividend Preference 820
Characteristics of General Partnerships 753
Cumulative or Non-Cumulative Dividend 821
Limited Partnerships 755
Financial Statement Disclosure of Dividends 822
Limited Liability Partnerships 756
Other Features of Preferred Shares 823
Basic Partnership Accounting 756
Closing Entries for Corporations 824
Organizing a Partnership 757
Financial Statement Analysis 826
Dividing Profit or Loss 758
Return on Equity 826
Partnership Financial Statements 763
Book Value Per Share 827
Mid-Chapter Demonstration Problem 764 Summary 829
Solution 765 Demonstration Problem 831
Admission and Withdrawal of a Partner 767 Solution 832
Admission of a Partner 767 Glossary 834
Withdrawal of a Partner 770 Knowledge Check-Up 835
Death of a Partner 771 Concept Review Questions 835
Liquidation of a Partnership 772 Quick Study 836
No Capital Deficiency 772 Exercises 841
Capital Deficiency 774 Problems 848
Summary 775 Alternate Problems 854
Demonstration Problem 777 Analytical and Review Problems 859
Solution 778 Ethics Challenge 860
Glossary 779 Focus on Financial Statements 860
Knowledge Check-Up 780 Critical Thinking Mini Case 862
Concept Review Questions 781
Quick Study 781
Exercises 783
CHAPTER 13
Problems 788 Corporate Reporting: Profit, Earnings Per
Alternate Problems 793 Share, and Retained Earnings 863
Analytical and Review Problems 797 Additional Share Transactions 866
Ethics Challenge 798
Share Dividends 866
Focus on Financial Statements 798
Share Splits 868
Critical Thinking Mini Case 799
Repurchase of Shares 870
CHAPTER 12 Solution 873
Organization and Operation of Financial Statement Presentation and Analysis 874
Corporations 800 Earnings Per Share (EPS) 874
Dividend Payout Ratio 879
Corporate Form of Organization 802
Reporting Profit Information 880
Characteristics of Corporations 802
Comprehensive Income 882
Organizing a Corporation 804
Retained Earnings 883
Corporate Financial Statements 807
Restricted Retained Earnings 884
Income Statement 807
Accounting Changes 884
Statement of Changes in Equity 808 Summary 887
Balance Sheet 809 Demonstration Problem 888
Issuing Shares 810 Solution 889
Accounting for Shares 811 Glossary 890
Motivation for Preferred Shares 815 Knowledge Check-Up 890
Mid-Chapter Demonstration Problem 816 Concept Review Questions 891
Solution 817 Quick Study 892
viii
CONTENTS
Exercises 894 Knowledge Check-Up 962

Problems 901 Concept Review Questions 963
Alternate Problems 907 Quick Study 964
Analytical and Review Problem 913 Exercises 967
Ethics Challenge 913 Problems 974
Alternate Problems 978
CHAPTER 14 Critical Thinking Mini Case 985
Bonds and Long-Term Notes
Payable 916 CHAPTER 15
Basics of Bonds 918
Accounting for Debt and
Advantages of Bonds 918 Share Investments 986
Disadvantages of Bonds 920 Purpose of Debt and Share Investments 988
Types of Bonds 921 Classification of Investments 989
Bond Issuing Procedures 922 Accounting for Non-Strategic Investments 990
Bond Trading 922 Accounting for Equity Investments (Non-Strategic) 990
Accounting for Bonds 924 Accounting for Debt Investments 993
Issuing Basic Bonds—Par Value Bonds 924 Mid-Chapter Demonstration Problem 997
Issuing Bonds Between Interest Dates 925 Solution 998
Bond Pricing 927 Accounting for Investments in Associates 1000
Present Value of a Discount Bond 927 Accounting for Investment in Subsidiaries:
Present Value of a Premium Bond 929 Business Combinations 1002
Issuing Bonds at a Discount 930 Summary 1006
Amortizing a Bond Discount 931 Demonstration Problem 1007
Issuing Bonds at a Premium 934 Solution 1007
Amortizing a Bond Premium 934 Glossary 1009
Summary of Bond Discount and Premium Knowledge Check-Up 1010
Behaviour 936 Concept Review Questions 1011
Accruing Bond Interest Expense 936 Quick Study 1011
Bond Retirements 938 Exercises 1013
Bond Retirement at Maturity 938 Problems 1017
Bond Retirement Before Maturity 939 Alternate Problems 1020
Bond Retirement by Conversion to Shares 939 Analytical and Review Problem 1023
Mid-Chapter Demonstration Problem 940 Ethics Challenge 1023
Solution 941 Focus on Financial Statements 1024
Long-Term Notes Payable 944 Critical Thinking Mini Case 1025
Interest-Bearing Notes 944
Installment Notes 945
CHAPTER 16
Mortgage Notes 948
Reporting and Analyzing
Lease Liabilities 949
Lease Liabilities Entries 949
Cash Flows 1026
Financial Statement Analysis 953 Basics of Cash Flow Reporting 1029
Debt to Equity Ratio 953 Purpose of the Statement of Cash Flows 1029
Summary 955 Importance of Cash Flows 1029
Demonstration Problem 957 Measuring Cash Flows 1030
Solution 958 Classifying Cash Flows 1031
Appendix 14A PV Tables 960 Non-Cash Investing and Financing Activities 1033
Glossary 961 Format of the Statement of Cash Flows 1034
ix
CONTENTS
Preparing the Statement of Cash Flows 1036 Vertical (or Common-Size) Analysis 1113
1. Calculate the Net Increase or Decrease in Common-Size Statements 1113
Cash 1038 Common-Size Graphics 1115
2. Calculate and Report Net Cash Inflows (Outflows) Mid-Chapter Demonstration Problem 1116
From Operating Activities 1038 Solution 1118
Indirect Method of Reporting Operating Cash Flows 1039 Ratio Analysis 1120
Mid-Chapter Demonstration Problem 1044 Liquidity and Efficiency 1120
Solution 1045 Solvency 1126
3. Cash Flows From Investing Activities 1045 Profitability 1129
4. Cash Flows From Financing Activities 1047 Market 1132
5. Proving Cash Balances 1050 Summary of Ratios 1134
Cash Flows from Operating Activities—Direct Summary 1136
Method 1051 Demonstration Problem 1137
Demonstration Problem 1057 Solution 1138
Solution 1058 Glossary 1139
Summary of Reporting and Analyzing Cash Flows 1059 Knowledge Check-Up 1140
Summary 1060 Concept Review Questions 1141
Demonstration Problem Part A 1062 Quick Study 1141
Solution 1063 Exercises 1146
Demonstration Problem Part B 1066
Problems 1152
Solution 1067
Alternate Problems 1158
Glossary 1069
Analytical and Review Problems 1164
Knowledge Check-Up 1070
Concept Review Questions 1070
Quick Study 1071
Exercises 1077
Problems 1085
Alternate Problems 1091 APPENDIX I
Analytical and Review Problems 1097 Payroll Liabilities A-1
Critical Thinking Mini Case 1102 APPENDIX II
Financial Statement Information A-2
CHAPTER 17 Spin Master A-3
Analyzing Financial Statements 1104
WestJet A-8
Basics of Analysis 1106
Purpose of Analysis 1106
Telus A-14
Four Key Building Blocks of Financial Statement Indigo A-19
Analysis 1106
Information for Analysis 1107
Standards for Comparisons 1107 APPENDIX III
Tools of Analysis 1108 Chart of Accounts A-24
Horizontal Analysis 1108
Trend Analysis 1112 Index IN-1
x
Preface
A Note About Our Cover
The cover of the Sixteenth Canadian Edition is the work of Rachel Idzerda.
Rachel’s playful illustration spotlights many of the companies, entrepre-
neurs, and organizations featured in Fundamental Accounting Principles’
chapter-opening vignettes. See if you can spot the images representing
Zane Caplansky’s Deli (Chapter 1), Amazon’s drones (Chapter 6), Better-
with Ice Cream (Chapter 7), and the Vancouver Airport Authority (Chap-
ter 9). Rachel is a freelance illustrator specializing in editorial illustration
and portraiture. She works with her husband and lives with him and their
two dogs just outside of Toronto.
INSIDE THE CHAPTERS

As educators, instructors strive to create an environment that fosters learning and provides students with the
tools they need to succeed. The Sixteenth Canadian Edition continues to meet and surpass the high standards
the market expects from Fundamental Accounting Principles. We continue to put learning first, with student-
centred pedagogy and critical thinking lessons throughout the text.
All the pedagogical tools are carefully designed for ease of use and understanding, helping the instructor
teach and giving the students what they need to succeed.
PEDAGOGY
Student Success Cycle
Student success at the post-secondary level is measured not by how much Student Success Cycle
Read the material
knowledge a student has acquired, but rather by how well a student can use
knowledge. The Student Success Cycle, illustrated by a circular icon, rein-
forces decision-making skills by highlighting key steps toward understand- Apply
Do the
your critical
ing and critically evaluating the information the student has just read. thinking skills
exercises
Read–Do–Check–Apply reinforces active learning rather than passive

learning. This tool is integrated throughout the text, including the chapter
opening page, Checkpoint questions, Demonstration Problems, and end-of- Check your answers
chapter material.
Critical Thinking Challenge

An essential element of critical think-
ing is the ability to ask questions
while reading (or listening or speak- CRITICAL THINKING CHALLENGE
Why is assessing customer credit critical to the overall success of businesses like WN
ing). These exercises are designed
Pharmaceuticals?
to help students develop the skills
related to questioning. Suggested
answers are posted on Connect.
xi
PREFACE
IFRS AND ASPE—THE DIFFERENCES IFRS and ASPE—The Differences

International Financial Reporting Standards Accounting Standards for Private Enterprises
Difference (IFRS) (ASPE) This box appears at the end of every
Recording adjusting • Requires that financial statements be • Unlike IFRS, ASPE does not explicitly require
entries presented at least annuallya; therefore, that financial statements be presented at least chapter to highlight any differences or im-
adjustments would be prepared at least annually although it is implied given that
annually. However, for publicly listed
companies, securities commissions law
financial statements must be presented in a
timely mannerb and items must be presented
portant points about reporting and termi-
requires publicly listed companies to present consistently from period to period.c Financial
quarterly financial statements, which in turn statements are prepared at least annually for nology as they relate to the financial
would require that adjusting entries be tax purposes and, for example, to meet any
prepared at least quarterly. banking requirements. accounting course. The chapter content is
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• Both public and private enterprises may prepare adjusting entries more frequently, such as monthly,
to enhance the accuracy of information required for decision making. IFRS 2018 compliant for Volumes I and II;
Depreciation vs.
amortization
• Uses the term depreciationd (although it uses
amortization for intangible assets).e
• Uses the term amortization.f references are provided where appropriate.
a. IFRS 2018, IAS 1 para. 36.
b. ASPE, Accounting Standards, Section 1000.17(b).
c. ASPE, Accounting Standards, Section 1000.19-20.
d. IFRS 2018, IAS 16 para. 6.
e. IFRS 2018, IAS 38 para. 8.
f. ASPE, Accounting Standards, Section 3061.16.
Real-World Focus A business is an entity represented by one or more individuals selling products or services for profit. Products
sold include anything from athletic apparel (CCM, Bauer, Lululemon Athletica, Nike, Reebok) to elec-
The Sixteenth Canadian Edition has in- tronic devices (Apple, Dell, Hewlett-Packard, Samsung) and clothing (Abercrombie & Fitch, The Gap,
Zara). Service providers such as data communication providers (Bell, Rogers, Telus), food services
creased the use of real business examples (McDonald’s, Starbucks, Tim Hortons), and Internet services (Google, Twitter, Skype, Facebook,
Instagram) make our lives more connected. A business can be as small as an in-home tutoring business or as
to reflect the most current information large as George Weston Limited, the food processing company known for its President’s Choice and No
available. This continues the text’s strong Name brands, owner of the clothing label Joe Fresh, and holder of a significant investment in the supermarket
chain Loblaw Companies Limited. Nearly 100,000 new businesses are started in Canada each year, with
ties to the real world of accounting, be it most of them being founded by people who want freedom from ordinary jobs, a new challenge in life, or the
potential of earning extra money.
through detailed interviews with business-
people for the chapter-opening vignettes, examples of ethical standards and treatments, or annual reports for
both in-chapter example disclosures and end-of-chapter material. The first time an actual business is used, its
name is highlighted in bold magenta for emphasis. This integration with real-world companies helps engage
students while they read.
Food Truck Frenzy

Across the country, major urban centres are experiencing an industry trend to go to the street to entice customers with
a wide range of fresh, made-to-order food options. In Canada, the street vendor industry is in the growth phase of its
industry life cycle according to IBISWorld, a global market research firm. IBISWorld estimates the market for street
vendors in Canada will continue to grow over the next five years. Revenues are expected to reach $335 million with an
Video Links
expected annualized growth rate of 1.7% by 2023. The market is dominated by new market entrants—in most cases,
individual owners operating as sole proprietors. The most successful street vendors will take advantage of effective This text features interactive digital links directing
marketing and branding toward health-conscious consumers looking for unique dining options.
Thunderin’ Thelma made her debut on CBC’s Dragons’ Den when owner Zane Caplansky decided to expand his
famous downtown Toronto brick-and-mortar deli and enter the trendy urban food truck business. After being labelled
students and instructors to helpful videos to provide
“insane Zane” by Kevin O’Leary, and seeing the other Dragons balk at the 15% ownership interest at a proposed cost of
$350,000, Zane decided to continue his new business venture on his own. A year later, Caplansky returned to Dragons’
students with real-world application of the chapter
Den and boasted achieving profit margins between 30 and 40% and achieving $110,000 in sales in his first six months of
operation. Caplansky’s business continues to thrive, with its latest location at the Toronto Pearson International Airport. content and enhance student exposure to valuable
According to Zane, “persistence, hard work and integrity” are key to achieving success in new business initiatives.
online
Lar54656_ch08_538-603.indd Page 538 1/11/19 resources.
4:08 PM f-0016
Sources: https://www.ibisworld.ca/industry/street-vendors.html, accessed September 15, 2017; http://www.torontolife.com/daily-dish/people-dish/2011/11/03/
zane-caplansky-on-dragons-den, accessed April 15, 2014; http://www.postcity.com/Eat-Shop-Do/Eat/November-2013/Weekly-Restaurant-Recap-Harvest-
/203/MHR00306/Lar54656_disk1of1/1259654656/Lar54656_pagefiles
Kitchen/; CBC Dragons’ Den, Season 7, Episode 11, aired January 7, 2013; On the Journey Towards a Perfect Sandwich: Zane Caplansky at TEDxQueensU,
https://youtu.be/cN_8HMMnNFk, accessed September 14, 2017.
Video Links: http://www.cbc.ca/dragonsden/pitches/caplanskys-deli and https://youtu.be/cN_8HMMnNFk.
A Look Back, A Look at This

Chapter Receivables
In these brief paragraphs, students are
A Look Back
directed to reflect on their learning from Chapter 7 provides an introduction to internal control and cash with a detailed analysis of internal control
previous chapters and are provided with guidelines, banking activities, accounting for petty cash funds, and reconciling the differences between cash
reported in the bank account and cash in the company’s accounting records.
a high-level summary of the current
A Look at This Chapter
chapter. These helpful learning summa- This chapter takes a look at accounting for customer accounts receivable and short-term notes receivable,
ries assist students in understanding how specifically investigating tools such as initial recognition of the receivables and subsequent measurement at
the end of the accounting period. Valuation is assessed through methods to estimate bad debts, including the
their chapter by chapter learning ties into benefits of an A/R aging report, and using the accounts receivable turnover ratio and days’ sales uncollected
ratios to evaluate financial statements.
the big-picture learning objectives.
xii
Lar54656_ch01_001-077.indd Page 8 1/10/19 5:13 PM f-0016 PREFACE

Learning Objectives
Learning Objectives have long been a standard in the Larson textbook. By giving students a head start on what
the following material encompasses, the text readies them for the work ahead.
Checkpoints CHECKPOINT
This series of questions within the chap- 5.

What is the difference between private and public accountants?
6.
What are the four broad fields of accounting?
ter reinforces the material presented im- What is the purpose of an audit? 7.
8.
Distinguish between managerial and financial accounting.
mediately before it. These questions 9.
What is the difference between external and internal users of accounting information?
Why are internal controls important? 10.
allow students to “Do” problem material Do Quick Study question: QS 1-5
by referencing what they have just

learned. Answers at the end of each chapter will then allow them to “Check” their work, further supporting
the Student Success Cycle. Under each set of Checkpoints is a reference to the Quick Study questions (single-
topic exercises) available at the end of each chapter. Students can go ahead and try them at this point. Check-
point solutions are at the end of the chapter. Quick Study solutions are available on Connect.
Important Tips
Important Tip: Important tip boxes have been incorporated
Ensure you know the following rules as illustrated in Exhibit 2.7 before reading Chapter 3. For a helpful
learning tool, review the following video by Colin Dodds, an educational music video enthusiast. throughout the text to direct students’
Video Link: https://youtu.be/7EuxfW76BWU
attention to critical concepts that students
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Ethical Impact ETHICAL IMPACT

Ethics continues to be a critical founda- $18.7 Million Maple Syrup Theft
tion-level concern to prepare students to On July 30, 2012, Micheal Gavreau arrived at a warehouse to audit $30 million worth of inventory at the
Global Strategic Maple Syrup Reserve. To his surprise, several of the barrels were discovered to be empty;
understand and apply ethical values in others had their contents replaced with water. It was the “largest theft investigated by the Sûreté du
Québec in its history.” The leader of the heist was found guilty of fraud, theft, and trafficking stolen goods
their day-to-day decisions. This new fea- and was sentenced to eight years in prison and fined $9.4 million. This situation occurred because of in-
adequate internal controls. In Chapter 7 we will introduce you to the concept of internal controls and the
ture helps develop students to reach to- critical role they play in maintaining corporate assets.
What would you do if you noticed unusual activities or discrepancies at your audit client or place of
ward CPA-enabling competencies such work, such as boxes that looked like they had been tampered with? Would you turn a blind eye or would
you take the time to investigate?
as professional and ethical behaviour, Video Link: Follow this link to view a video summary of the full story of “The Sweetest Heist”: https://youtu.be/adCQ9cwYA8o.
problem solving and decision making,

communication, self-management, teamwork, and leadership skills. It will be an excellent tool instructors can
utilize to provide real-world relevance and develop these critical skills for students as they work toward devel-
oping professional competencies.
Each scenario is designed to strengthen each student’s professional competencies as they approach ethical
dilemmas that have been developed from current, real-world Canadian and global business scenarios. Each
box is designed with a concise scenario and provides open-ended questions to enable effective classroom dis-
cussions. Encourage students to use the framework presented in Chapter 1 Decision Insight on Resolving
Ethical Dilemmas to help them develop a compass to guide them through alternative courses of action.
Decision Insight
DECISION INSIGHT
Social responsibility is a key concern for today’s
Loblaw Companies Limited Converts from Periodic to Perpetual
generation of socially conscious students.

Loblaw Companies Limited began a process of converting its corporate-owned grocery stores from a
periodic inventory system to a perpetual inventory system that was completed in 2014. The improved
information is a result of an upgrade to its IT infrastructure, enabling the stores to integrate costing
Through the Decision Insight feature, account-
information more effectively for items held in inventory.
ing’s role in ethics and social responsibility is de-

scribed by both reporting and assessing its impact. Relating theory to a real-life situation piques interest and
reinforces active learning.
xiii
PREFACE
Decision Maker Guidance Answer to DECISION MAKER

This feature requires students to make Analyzing Results
Yes, you are concerned about the absence of a depreciation adjustment on the manufacturing
accounting and business decisions by us- equipment. Equipment does lose value as it is used in the business, and financial statements must
recognize this occurrence. Its absence suggests an error or a misrepresentation (there is also the
ing role-playing to show the interaction possibility that equipment is fully utilized and should have been completely depreciated or that it
was scrapped).
of judgment and awareness, as well
Analyst
as the impact of decisions made. This A current ratio of 1.2 suggests that current assets are sufficient to cover current liabilities, but it implies a
feature works well to develop enabling minimal buffer in case of errors in measuring current assets or current liabilities. Removing the past due
receivable reduces the current ratio to 0.7. Your assessment is that the bakery will have some difficulty
professional competencies such as pro- meeting its loan payments.
fessional and ethical behaviour, problem

solving and decision making, communication, self-management, teamwork, and leadership skills. These
boxes work well in conjunction with the new Ethical Impact box. Guidance answers are available at the end of
each chapter.
Extend Your Knowledge (EYK)

Supplementary material has been developed
For further study on some topics of relevance to this chapter, please see the following Extend Your Knowledge
supplements:
to explore some topics in more detail than the
EYK 4-1 Work Sheet Demonstration textbook can allow. A list of EYKs relevant to
EYK 4-2 Corporate Supplement
EYK 4-3 Summary of Business Activities each chapter is presented at the end of the
EYK 4-4 Examples of Classified Balance Sheets
chapter, alerting students to visit Connect if
they choose to delve deeper into the material.
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Financial Statements
Features and assignments that highlight
companies such as Spin Master (a 2017 Annual Report
Stretching our wings

successful Canadian toy innovator and
children’s entertainment company) and
WestJet (a company that provides services)
show accounting in a modern and global
context. Because students go directly to the
financial statements of real companies,
SPIN MASTER CORP.
they remain engaged in the active learning 2017 ANNUAL REPORT
process. The audited annual financial

statement section of these annual reports
(with notes to the financial statements), as
well as those of Telus and Indigo Books
& Music (with weblinks provided to ac-
strongertogether
cess the notes), are reproduced at the end
of Volume 1. In Volume 2, the annual au- “ THE FUTURE BELONGS TO
dited financial statements are presented THOSE WHO BELIEVE IN THE

BEAUTY OF THEIR DREAMS
.”
– ELEANOR ROOSEVELT
without notes, and weblinks are provided

for student access to the full set of Annual
Reports.
ANNUAL REPORT
FOR THE 52 -WEEK PERIOD
ENDED MARCH 31, 2018
2017 ANNUAL REPORT
xiv
PREFACE
End-of-Chapter Material
Fundamental Accounting Principles sets the standard for quantity and quality of end-of-chapter material.
Summary SUMMARY
LO1 Explain the accounting cycle. The accounting equity item. Information is taken from accounts, ana-
Each chapter includes a Summary of the chapter by
cycle includes the steps in preparing financial state- lyzed, summarized, and presented in useful reports
ments for users that are repeated each reporting and financial statements for users.
Learning Objective, to reinforce what students have period.
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LO2 Describe an account, its use, and its relationship
LO3 Define debits and credits and explain their role
in double-entry accounting. Debit refers to left,
to the ledger. An account is a detailed record of in- and credit refers to right. The following table
just learned. creases and decreases in a specific asset, liability, or summarizes debit and credit effects by account type:
Guidance Answer to DECISION MAKER Guidance Answers to Decision Maker

Accounting Clerk
The business entity principle is being violated because it requires that the owner’s personal expenses be
These discuss the Decision Maker boxes presented earlier
recorded separately from those of his business. By debiting the entire amount to Office Supplies, assets
will be overstated on the balance sheet. By crediting Accounts Payable for the whole amount, liabilities will in the chapter, and reinforce the need for decision mak-
also be overstated. At the end of the accounting period when the amount of supplies used is recorded,
Office Supplies Expense will be overstated on the income statement, causing profit to be understated.
When profit is too low, equity is also understated.
ing and critical thinking skills. This feature fits into the
Student Success Cycle by reinforcing the “Apply” step.
Guidance Answers to CHECKPOINT

1. Best Buy.
2. Total cost is $12,180, calculated as: $11,400 + $130 + $150 + $100 + $400.
3. The matching principle.
4. Businesses that sell unique, high-dollar-value merchandise in relatively low volume levels
Guidance Answers to Checkpoint might choose specific identification. Car dealerships are a good example because each car
received as merchandise inventory is unique in terms of both features and identification
number. Using specific identification allows the business to accurately tag each item coming
The Checkpoint material throughout the chapter allows 5.

in and going out.
Moving weighted average gives a lower inventory figure on the balance sheet as compared to
FIFO. FIFO’s inventory amount will approximate current replacement costs. Moving weighted
students to pause and check their progress. This feature average costs increase but more slowly because of the effect of averaging.
6. Because these units are the same ones that were originally written down, a reversal is appropri-
reinforces the “Do,” “Check,” and “Apply” steps of the ate and would be recorded as:
Student Success Cycle. Merchandise Inventory ...............................................................

Cost of Goods Sold.............................................................
2,000
2,000
$1,800 − $1,300 = $500/unit original write-down:
$500 × 4 = $2,000 maximum reversal
7. The reported inventory amount is $540, calculated as (20 × $5) + (40 × $8) + (10 × $12).
8. Cost of goods sold is understated by $10,000 in 2020 and overstated by $10,000 in 2021.
GLOSSARY
Consignee One who receives and holds goods owned by period so that the financial statements of succeeding
another party for the purpose of acting as an agent and periods will be comparable.
selling the goods for the owner. The consignee gets paid
a fee from the consignor for finding a buyer.
Days’ sales in inventory A financial analysis tool used to
estimate how many days it will take to convert the inventory
Glossary
Consignor An owner of inventory goods who ships them to on hand into accounts receivable or cash; calculated by
another party who will then find a buyer and sell the goods dividing the ending inventory by cost of goods sold and All terms highlighted in the chapter are included.
for the owner. The consignor retains title to the goods while multiplying the result by 365.
they are held offsite by the consignee. Faithful representation The accounting principle that
Consistency principle The accounting requirement that a requires information to be complete, neutral, unbiased,
company use the same accounting policies period after and free from error.
Knowledge Check-Up
KNOWLEDGE CHECK-UP
This new feature has been incorporated to enable in- 1. Two features distinguishing property, plant, and equip- 7. Which of the following depreciation methods allocates
structors to do a quick initial assessment of reading ment (PPE) from other assets are that:
a. PPE is used in business operations to generate revenue
more depreciation in the early years of an asset’s life and
less depreciation in later years:
and provides benefits for more than one accounting a. units-of-production method
comprehension through a 10-question multiple- period.

b. PPE is acquired through a contract and provides bene-
b. double-declining-balance method
c. straight-line method
fits for more than one accounting period. d. None of the above.
choice quiz that can easily be facilitated at the be- c. PPE is used in business operations to generate revenue 8. When there is a revised useful life on a depreciated asset
due to more information being available or because of a
and adds value to the organization.
subsequent capital expenditure, which of the following is
ginning of a lecture. The questions have been d. None of the above.
2. The cost of PPE includes which of the following:
adjusted:
a. Depreciation per year is recalculated based on present
written by the author to cover key learning objec- a. Its invoice price, less any cash discount for early
payment
value of the future cash flows expected to be received
from the underlying asset.
b. Freight, unpacking, and assembling costs b. Depreciation per year remains unadjusted.
tives from the chapter readings. They can be used in c. Non-refundable sales tax (PST) c. Depreciation per year is recalculated based on the fair
value of the asset.
d. All of the above.
d. Depreciation per year is recalculated based on the re-
conjunction with a flipped teaching pedagogy in or- 3. Which of the following costs should be capitalized as a
betterment:
maining years of useful life.
9. Vegan Bites, a local restaurant, had to replace the roof of
a. Replacement of the engine for the company’s trans- its building. Advise the new controller on how to handle
der to motivate students to complete readings ahead port truck. the accounting adjustment for the new roof:
a. The amount is debited to the corresponding asset ac-
b. Installation costs for a new roof on the factory
of class time, enabling instructors to spend more c. Costs to recalibrate and reprogram the factory ma-
chines to tighten quality
count and no adjustment is made to the depreciation
of the asset.
b. The amount is debited to the corresponding asset ac-
d. All of the above.
time in class on in-depth coverage of complex learn- 4. Which of the following items qualify as repairs and main-
count and depreciation is revised to incorporate the
additional cost and change the estimated useful life
tenance expense: and residual value.
ing objectives. Solutions can be found under the In- a. Costs to repair the loading dock that was recently
damaged by a delivery truck
c. The cost of the original asset is removed from the ac-
counting records and any gain or loss must be re-
structor Resources link on Connect.
xv
PREFACE
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Demonstration Problem
This Demonstration Problem is based on the same facts as the Demonstration Problem at the end of Chap-
ter 1 except for two additional items: (b) August 1 and (k) August 18.
PROBLEM MATERIAL The following activities occurred during the first month of Joanne Cardinal’s new haircutting business
called The Cutlery:
Demonstration Problems a. On August 1, Cardinal put $16,000 cash into a chequing account in the name of The Cutlery. She also
invested $10,000 of equipment that she already owned.
These problems reinforce the chapter material and

Lar54656_ch04_234-312.indd Page 269 12/27/18 2:04 PM f-0016 b. On August 1, Cardinal paid $2,400 for six months of insurance effective immediately.
c. On August 2, she paid $2,000 cash for furniture for the shop.
further bolster the Student Success Cycle. d. On August 3, she paid $3,200 cash to rent space in a strip mall for August.
e. On August 4, she furnished the shop by installing the old equipment and some new equipment that
she bought on credit for $21,000. This amount is to be repaid in three equal payments at the end of
August, September, and October.
Analysis Component
An analysis component is included in each Mid- and
End-of-Chapter Demonstration Problem, as well as
Analysis Component:
Refer to The Cutlery’s August 31, 2020, financial statements. What do each of equity and liabilities several Exercises, Problems, and Focus on Financial
represent?
Statements questions. These promote critical thinking
and give students opportunities to practise their ana-
lytical skills.
CONCEPT REVIEW QUESTIONS

1. What tasks are performed with the work sheet? 7. What is the purpose of the Income Summary account?
How is it different from the Income Statement?
2. What two purposes are accomplished by recording closing
entries? 8. Explain whether an error has occurred if a post-closing trial
balance includes a Depreciation Expense, Building account.
3. What are the four closing entries?
Concept Review Questions 4. Daniel is having trouble determining whether with-
9. Refer to Spin Master’s income statement in Appendix III
at the end of the book. What journal entry was recorded
drawals, owner’s capital, interest income, and prepaid
as of December 31, 2017 to close the revenue account?
These short-answer questions reinforce the chapter insurance are temporary or permanent accounts. Explain
to him the difference between a temporary and a perma- 10. What is a company’s operating cycle?
nent account in accounting and classify the accounts into
content by Learning Objective. each category.
11. Why is a classified balance sheet more useful to financial
statement users than a non-classified balance sheet?
5. Alexis believes that temporary account information is 12. What classes of assets and liabilities are shown on a typical
deleted through the closing entries. Do you agree or classified balance sheet?
disagree? Explain. What is the relationship between
temporary and permanent accounts?
Lar54656_ch06_396-467.indd Page 437 1/9/19 5:20 PM f-0016 6. Describe the similarities and differences between ad-
justing and closing entries.
QUICK STUDY Quick Study

QS 6-1 Inventory ownership LO1 These single-topic exercises give students a quick
1. At year-end Carefree Company has shipped, FOB destination, $500 of merchandise that is still in transit
to Stark Company. Which company should include the $500 as part of inventory at year-end? test of each key element in the chapter and are ref-
2. Carefree Company has shipped goods to Stark and has an arrangement that Stark will sell the goods for
Carefree. Identify the consignor and the consignee. Which company should include any unsold goods as erenced to Learning Objectives. Answers to these
part of inventory?
items are available on Connect.
Exercises Exercise 6-3 Specific identification cost flow assumption LO2

CHECK FIGURES: COGS = $9,427; Gross profit = $15,073
Exercises provide students with an additional Refer to the data in Exercise 6-2. Assume that Urban Glam Cosmetics uses the specific identification method
to cost inventory. The 700 units were specifically sold as follows:
opportunity to reinforce basic chapter concepts by
Learning Objective. Note: Selected end-of-chapter Jan. 10:
Mar. 15:
70
3
units from beginning inventory
units from beginning inventory, and
177 units from the March 14 purchase
exercises and problems are marked with this icon: Oct. 5: 50 units from the March 14 purchase, and
400 units from the July 30 purchase
. These have Excel templates located on

Calculate cost of goods sold and the gross profit.
Connect.
xvi
PREFACE
PROBLEMS
Problem 1-1A Identifying type of business organization LO2 Problems
Complete the chart below by placing a check mark in the appropriate column.
Problems typically incorporate two or more con-
Type of Business Organization cepts. There are two groups of problems: A prob-
Characteristic Sole Proprietorship Partnership Corporation
Limited liability lems and Alternate or B problems. B Problems

Unlimited liability
mirror the A problems to help improve understand-
Owners are shareholders
Owners are partners ing through repetition.

Taxed as a separate legal entity
ETHICS CHALLENGE
EC 5-1
Ethics Challenge Claire Phelps is a popular high school student who attends approximately four dances a year at her high
school. Each dance requires a new dress and accessories that necessitate a financial outlay of $100 to $200 per
Each chapter includes at least one Ethics Challenge event. Claire’s parents inform her that she is on her own with respect to financing the dresses. After incurring
a major hit to her savings for the first dance in her second year, Claire developed a different approach. She
to reinforce critical thinking skills for students and buys the dress on credit the week before the dance, wears it to the dance, and returns the dress the next week
to the store for a full refund on her charge card.
open up discussion about various ethical topics. Required
1. Comment on the ethics exhibited by Claire and possible consequences of her actions.
2. How does the store account for the dresses that Claire returns?
FOCUS ON FINANCIAL STATEMENTS

FFS 2-1
Travis McAllister operates a surveying company. For the first few months of the company’s life (through April),
the accounting records were maintained by an outside bookkeeping service. According to those records,
Focus on Financial Statements
McAllister’s equity balance was $75,000 as of April 30. To save on expenses, McAllister decided to keep the records
himself. He managed to record May’s transactions properly, but was a bit rusty when the time came to prepare Each chapter includes two technical and analytical
the financial statements. His first versions of the balance sheet and income statement follow. McAllister is both-
ered that the company apparently operated at a loss during the month, even though he was very busy. questions that incorporate into the financial state-
McAllister Surveying
ments all major topics covered up to that point. Ad-
Income Statement
For Month Ended May 31, 2020
ditional questions are available online on Connect.
Revenue:
Investments by owner ...................................... $ 3,000
Unearned surveying fees................................. 6,000
Total revenues ................................................ $ 9,000
CRITICAL THINKING MINI CASE

Prairie Insurance sells life insurance, disability insurance, vehicle insurance, crop insurance, and home-
Critical Thinking Mini Cases owners’ insurance. You are employed by Prairie Insurance and have been promoted to sales division manager
for the Western Canadian division. You will be supervising approximately 25 salespeople, along with five ad-
These cases give students the opportunity to apply ministrative assistants at various locations. The salespeople travel extensively and submit expense reports
along with sales information monthly. A sample expense report for September shows:
critical thinking skills to concepts learned in the
chapter, thus further reinforcing the “Apply” step of Prairie Insurance—Western Canadian Division
Sales Report: John Bishop
Month Ended September 30, 2020
the Student Success Cycle. Sales revenue* ............................................................ $56,000

Expenses** ................................................................... 34,000
*Sales invoices attached

**Receipts attached
Help Me Solve It
New Help Me Solve It tutorials are available on Connect for Larson’s Fundamental Accounting
Principles. The tutorials guide students through one or two of the more challenging end-of- Help Me
chapter problems per chapter, providing them with an engaging visual and audio walk-through SOLVE IT
of the problem.
xvii
What’s New
The Accounting Standard
We listened! Through extensive reviewing and consultations with the market, we have heard the issues and
concerns instructors like you have about the materials you use to teach introductory financial accounting.
Here you will find a list of new changes to specific chapters that our author has made to ensure the content
of Larson’s Fundamental Accounting Principles remains current and fresh. Whether you are new to using
Fundamental Accounting Principles or new to this edition, you can see that McGraw-Hill Education and
Larson/Dieckmann are setting the accounting standard in Fundamental Accounting Principles. We know
you’ll like what you see.
GENERAL UPDATES beginning of each lecture to encourage students

to complete chapter readings before class.
• Larson continues to strive to achieve the ultimate
Answers are provided on Connect under the
balance between the preparer focus and user
instructor resources tab.
focus in its delivery of financial accounting to
meet the current needs of today’s diverse range • Appendix III for Volume 1 includes the complete
of students. A strong preparer focus provides annual audited financial statements, including
students with the tools to understand what is notes to the financial statements, for Spin Master
happening at the individual transaction level and WestJet, as well as the audited financial
to the financial statements, providing a strong statements without the notes for Telus and Indigo
foundation for a career in accounting, as an Books & Music. Appendix II for Volume 2 includes
entrepreneur, or as a savvy business professional. the annual audited financial statements,
These skills are essential for students to develop excluding notes to the financial statements,
to accurately understand the numbers behind for Spin Master, WestJet, Telus, and Indigo.
key decisions they will face in their careers. In • Throughout each chapter in both Volumes 1 and 2,
addition, each chapter provides several real-world new end-of-chapter practice questions have been
company business scenarios, an increased focus added in targeted areas, based on feedback from
on ethical issues, financial statement excerpts, the market, where students would benefit from
and financial statement analysis tools to prepare additional practice opportunities. Approximately
students to be an effective decision maker in any 25% of the exercises and problems have been
career path they choose. refreshed in terms of numbers and/or business
• Increased emphasis on global perspectives, scenarios. Existing company scenarios have been
bringing ethical issues and examples to students expanded and updated to provide students with
from around the world. more information and updated examples to
• New Knowledge Check-Up (KCU) questions are enhance student engagement. Volume 1 and 2
ten single-topic, multiple-choice questions de- end-of-chapter content was revised by Laura
signed to assess initial comprehension of the key Dallas of Kwantlen Polytechnic University.
chapter learning objectives. These reading readi- • The chapter content is IFRS 2018 compliant
ness assessments have been written by the author throughout Volume 1 and Volume 2; references
to provide students with a quick and easy test as are included where appropriate. New updates
to whether they achieved the critical comprehen- include coverage of IFRS 16 Leases in Chapter 14
sion concepts in each chapter before moving and conceptual framework integrated through-
onto more comprehensive review problems. out. IFRS and ASPE differences are identified at
These can be used as a quick mini quiz at the the end of each chapter.
xviii
PREFACE
• The Sixteenth Canadian Edition includes three • Updated critical thinking challenge on the Airside
exciting new chapter-opening vignettes, and sig- Operations Building at YVR.
nificant updates to the remaining 14 featuring a • New engaging chapter preview to help students
range of engaging topics and including inspiring understand capital investments in PPE.
stories from company startups to success stories
• Updated Decision Maker to enhance student
of well-known businesses and not-for-profit orga-
engagement.
nizations. Nearly all of the vignettes include rel-
• New example of obsolescence to aid in student
evant video links for students to broaden their
understanding.
real-world exposure to critical business decisions.
• Updated presentation of accounting for acquired
• Seventeen new Ethical Impact boxes have been
buildings versus constructed buildings to enhance
crafted to highlight an ethical dilemma for each
student comprehension.
chapter based on a real-world example linked
directly to issues within the chapter learning • Updated mid-chapter and end-of-chapter demon-
objectives. Instructors can take a moment to help stration problems.
students develop these critical professional skills. • Updated financial statement excerpts, featuring
• Real-world relevance is provided with actual presentation of Indigo Books & Music Inc.’s
businesses used as examples with several finan- accounting policy and depreciation schedule for
cial statement excerpts throughout Volumes 1 property, plant, and equipment and Microsoft’s
and 2, including issues relating to financial state- presentation and disclosure over intangible
ment presentation and disclosure. These real assets.
company names are bolded and highlighted in • Updated coverage of patents and copyrights to
magenta at first mention to emphasize integra- reflect current Canadian laws over intellectual
tion of accounting concepts with actual business property rights.
practice. • New example of acquisition: Shoppers Drug Mart
• New Important Tip boxes have been added and by Loblaw Companies, Ltd. is provided with
are incorporated throughout the text to direct stu- example note disclosure to help students under-
dents’ attention to critical concepts that students stand accounting for goodwill.
often miss in their initial reading of the text. • New Exhibit 9.23: World’s Most Valuable Brands.
• Chapter 9 on property, plant, and equipment is • New Knowledge Check-Up review section
now included in both Volume 1 and Volume 2 to added with ten multiple choice questions
offer flexibility to instructors, depending on insti- written by the author to test the reading
tutional course design. readiness of students as they move on to the
• Chapter 14 includes a more integrated approach end of chapter content.
to bond pricing that includes instructional tips
on how to use a financial calculator, with helpful
Chapter 10
hints and examples provided for students to fol-
• New chapter-opening vignette spotlighting Toys
low along during their chapter reading.
R Us outlining the danger of high levels of debt
and highly leveraged buyouts.
CHAPTER-BY-CHAPTER UPDATES • Updated definition of a liability, including
Chapter 9 Exhibit 10.1 Characteristics of a Liability to align
• New chapter-opening vignette featuring Vancou- with revised IFRS Conceptual Framework.
ver International Airport; includes a video link • Updated Exhibit 10.3 and 10.4 to provide a cur-
spotlighting YVR’s state-of-the-art Airside Opera- rent example from Empire Company Limited’s
tions Building. 2017 annual report.
xix
PREFACE
• New Decision Insight on crowdfunding—outlining Chapter 12

to students an alternative method of funding • New chapter-opening vignette featuring Poppy
options that provide entrepreneurs with alterna- Barley, highlighting the company’s journey from
tive options to raise critical funds during the concept to business launch and how it keeps em-
start-up phase of their business. ployees empowered with monthly financial re-
• Updated Exhibit 10.6 with 2018 effective provin- views, training on financial statement analysis,
cial sales tax rates for PST, GST, and HST. and a commitment to ethical decision making.
• Updated CNR example of current portion of • New real-world example of corporate taxation
provisions, based on its 2017 annual report financial statement presentation taken from
disclosures in note 16 of its annual report. Cineplex Inc.’s December 31, 2017 income
• New Ethical Impact box outlining the business statement.
circumstances relating to the SEC penalty issued • New Ethical Impact box featuring Topher White’s
to Logitech of $7.5 million for “fraudulently start-up company Rainforest Connection, which
inflating its 2011 results” related to the warranty uses used cell phones to help solve deforestation
under accrual and failure to amortize certain and other issues in undeveloped rainforest habi-
intangibles. Students are put in the role of the tats impacting native communities. Reintroduces
senior accountant who recognized the errors in students to the concept of crowdfunding and
estimating warranty accruals and probes them asks readers if they would be willing to go the
on how they would have handled the real-life extra mile to help solve major world issues.
circumstances in this scenario. • New Decision Insight featuring 3twenty Modular
• New Knowledge Check-Up review section and Zigloo, which specialize in intermodal steel
added with ten multiple choice questions building units; asks students to consider whether
written by the author to test the reading the ISBU industry is sustainable.
readiness of students as they move on to • Updated accounting for shares example of
the end of chapter content. WestJet Airline’s trading history.
Chapter 11 • Updated example of Telus Corporation’s
• Updated chapter-opening vignette featuring dividends declared in its 2017 annual report.
Canadian-born start-up Kicking Horse Coffee • New Decision Insight on RBC’s share redemption
includes video links featuring an interview on of its First Preferred Shares Series AB.
entrepreneurship and expansion into the United • New Decision Insight featuring Etsy-based
States and subsequent acquisition by Italy-based, start-up company Flushed in Flora, developed
privately owned, Lavazza S.p.A. by Kristy Baptista, a young entrepreneur who
• New Ethical Impact box featuring suggestions on focuses on developing sustainable natural dyed
structuring a partnership agreement, including a fabrics and fashion for today’s eco-conscious
helpful video link; asks students how they can shoppers.
structure a partnership to ensure its success and • New Knowledge Check-Up review section
what precautions they can take to structure their added with ten multiple choice questions
agreement to handle any potential problems. written by the author to test the reading
• New Important Tip box on providing clarity to readiness of students as they move on to
students on the process of allocating a loss in a the end of chapter content.
partnership.
• New Knowledge Check-Up review section added Chapter 13
with ten multiple choice questions written by the • New Ethical Impact box featuring Elizabeth
author to test the reading readiness of students as Holmes and former president Ramesh Balwani
they move on to the end of chapter content. deceiving Theranos investors by overstating the
xx
PREFACE
capabilities of the company’s portable blood test- tutorial for using the Texas Instruments BA II Plus
ing devices as well as its business and financial financial calculator to calculate the price of a bond.
performance. The box outlines the SEC investiga- • New expansion of Exhibit 14.6, featuring the cal-
tion into their massive accounting fraud that im- culation of the Metro Toronto Zoo bond price, in-
pacted many private equity investors. The box cluding a section that breaks down the calculator
asks students some directed questions, such inputs for students to use as they follow along in
as How would you handle pressures to raise capi- their reading of the text.
tal for a business that is struggling to prove its
• Expansion of an Important Tip box on outlining
technical feasibility? Would you be able to with-
the calculation of the bond interest expense for
stand the pressure to deceive investors to remain
the period.
afloat? Do you think Elizabeth Holmes has any
• New Important Tip box on calculating interest
regrets? How could the private equity investors
expense when bonds are issued at a premium.
have protected themselves?
• Updated mid-chapter demonstration problem
• Updated dividend payout ratio featuring the divi-
featuring calculator inputs as part of the
dend payout ratio for Telus Corporation and pro-
expanded solution.
viding more real-world context for chapter content.
• Updated real-world example from Note 10 of
• Updated real-world example financial statement
WestJet’s 2017 annual report, featuring its
presentation featuring Canadian Tire Corporation’s
installment details of its term loans.
Consolidated Income Statement and Consolidated
Statement of Comprehensive Income from the • Updated real-world example in Mortgage Notes,
company’s December 31, 2017 annual report. featuring Boardwalk REIT’s Note 11 of its 2017
annual report.
• New Knowledge Check-Up review section added
with ten multiple choice questions written by the • Updated section on leases to reflect changes to
author to test the reading readiness of students as IFRS 16.
they move on to the end of chapter content. • New Decision Insight featuring a fictitious
example that was written based on a real-world
example of a property management group that
Chapter 14
provides lease arrangements to retailers that
• Updated chapter-opening vignette featuring two
need retail space. Provides a “what would you
examples of real bond issuances by ZooShare
do” scenario to an identified discrepancy that
with different risk profiles; includes a video link
benefits the property management group.
to help students understand the business model
of ZooShare’s renewable energy cooperative. • Updated debt to equity ratio analysis for BCE and
Telus based on their 2017/2016 annual reports.
• Updated Decision Insight featuring an example
bond issuance for Telus Corporation to enhance • New Knowledge Check-Up review section added
real-world application of the bond issuance with ten multiple choice questions written by the
procedures. author to test the reading readiness of students
as they move on to the end of chapter content.
• New Important Tip box added on calculating a
bond’s coupon payment. Chapter 15
• New Decision Insight featuring a current trend • Updated chapter-opening vignette featuring
of US corporations issuing “maple bonds” in Saskatchewan craft brewery start-up Farmery;
Canadian dollars to attract Canadian investors. includes video links to a CBC Dragons’ Den
• New Important Tip box featuring tips in order to episode and a CBC interview.
use a calculator to determine the price of a bond, • New Exhibit 15.1 example disclosure from
“Calculating the Present Value of a Bond,” Unilever Group Disclosure for Investment in
including helpful resources such as a link to a video Securities based on their December 31, 2017
xxi
PREFACE
Annual Report, providing context to students the questions What are your thoughts on each of
and aiding comprehension of chapter topics. these requests? Why do you think Jacob is con-
• Updated example presented in Exhibit 15.2 cerned about these issues? and What will you do?
providing example real-world financial state- • New Knowledge Check-Up review section added
ment excerpts with financial disclosures for with ten multiple choice questions written by the
Indigo based on its investments in associates author to test the reading readiness of students
for Calendar Club. as they move on to the end of chapter content.
• Updated Exhibit 15.3 based on Freshii and its
post-IPO share price. Chapter 17
• New chapter-opening vignette featuring Roots
• Updated Accounting for Investments section
Canada, providing a summary of the company’s
based on IFRS 9.
inception to its recent IPO.
• New Important Tip box on the amortized cost
• New Ethical Impact box featuring concerns over
method of accounting for bonds.
releasing financial information through social
• New Ethical Impact box placing the student in the
media. The student is presented with a scenario
role of controller, reporting to the VP of finance,
where they have accepted a position with a nation-
with a valuation concern over the investment
wide property developer that is considering going
portfolio of solar energy bonds. Students are asked
public next year. The student reports directly to
what they would do and are given the opportunity
the VP of finance, Mia Kruner, and the student is
to reflect on their reaction to the scenario.
asked to manage the release of financial informa-
• New Knowledge Check-Up review section added tion through social media to help reach their
with ten multiple choice questions written by the established group of followers to get them excited
author to test the reading readiness of students for the upcoming IPO investment opportunity.
as they move on to the end of chapter content. The scenario asks students What will you do to
ensure your plan meets these objectives? and
Chapter 16 Do you have any concerns with Mia’s request?
• Updated chapter-opening vignette features Butter
• New Knowledge Check-Up review section added
Avenue patisserie and includes a video link for
with ten multiple choice questions written by the
students to learn more about the company.
author to test the reading readiness of students
• Updated Important Tip box on net cash inflows as they move on to the end of chapter content.
for operating activities.
• New real-company financial statement presenta- Appendix I
tion provided for Australia’s Treasury Wine Es- • All rates (i.e., EI, CPP, provincial tax, federal tax)
tates, parent company of such brands as Sterling are updated to 2018.
Vineyards, Wolf Blass, and Lindeman’s, for the
year ended June 30, 2017 illustrating the direct Appendix II
method of reporting cash flow. • Includes annual audited financial statements
• New Ethical Impact box featuring a sustainable (excluding notes to the financial statements) for
clothing distributor with an aggressive expansion Spin Master, WestJet, Telus, and Indigo Books &
strategy. President and founder Jacob River has Music. (See Volume 1 for Spin Master and WestJet
identified the bank’s focus on a reported increase audited financial statements with notes.)
in cash flow from operating activities on the cash
flow statement. Later, Jacob presents to the student Appendix III
some proposed adjustments to their prepared cash • Sample chart of accounts updated to reflect text-
flow statement; the box asks students to consider book content.
xxii
PREFACE
Market Leading Technology
LEARN WITHOUT LIMITS

McGraw-Hill Connect® is an award-winning digital teaching and learning platform that gives students the
means to better connect with their coursework, with their instructors, and with the important concepts that
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McGraw-Hill’s trusted content to seamlessly deliver assignments, quizzes, and tests online. McGraw-Hill
Connect is the only learning platform that continually adapts to each student, delivering precisely what they
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personal, easy, and proven.
CONNECT KEY FEATURES:

Smartbook®
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SmartBook creates a personalized reading experience by highlighting the most important concepts a student
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ously adapts by highlighting content based on what each student knows and doesn’t know. This ensures that
he or she is focused on the content needed to close specific knowledge gaps, while it simultaneously promotes
long-term learning.
Connect Insight®
Connect Insight is Connect’s one-of-a-kind visual analytics dashboard—available for instructors—that pro-
vides at-a-glance information regarding student performance, which is immediately actionable. By presenting
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When it comes to studying, time is precious. Connect helps students learn more efficiently by providing
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xxiii
Another random document with
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England, is perplexed to see with what admirable sweetness and
patience the majority of the free States are schooled and ridden by
the minority of slave-holders. What if we should send thither
representatives who were a particle less amiable and less innocent?
I entreat you, sirs, let not this stain attach, let not this misery
accumulate any longer. If the managers of our political parties are
too prudent and too cold;—if, most unhappily, the ambitious class of
young men and political men have found out that these neglected
victims are poor and without weight; that they have no graceful
hospitalities to offer; no valuable business to throw into any man’s
hands, no strong vote to cast at the elections; and therefore may
with impunity be left in their chains or to the chance of chains,—then
let the citizens in their primary capacity take up their cause on this
very ground, and say to the government of the State, and of the
Union, that government exists to defend the weak and the poor and
the injured party; the rich and the strong can better take care of
themselves. And as an omen and assurance of success, I point you
to the bright example which England set you, on this day, ten years
ago.
There are other comparisons and other imperative duties which
come sadly to mind,—but I do not wish to darken the hours of this
day by crimination; I turn gladly to the rightful theme, to the bright
aspects of the occasion.
This event was a moral revolution. The history of it is before you.
Here was no prodigy, no fabulous hero, no Trojan horse, no bloody
war, but all was achieved by plain means of plain men, working not
under a leader, but under a sentiment. Other revolutions have been
the insurrection of the oppressed; this was the repentance of the
tyrant. It was the masters revolting from their mastery. The slave-
holder said, ‘I will not hold slaves.’ The end was noble and the
means were pure. Hence the elevation and pathos of this chapter of
history. The lives of the advocates are pages of greatness, and the
connection of the eminent senators with this question constitutes the
immortalizing moments of those men’s lives. The bare enunciation of
the theses at which the lawyers and legislators arrived, gives a glow
to the heart of the reader. Lord Chancellor Northington is the author
of the famous sentence, “As soon as any man puts his foot on
English ground, he becomes free.” “I was a slave,” said the counsel
of Somerset, speaking for his client, “for I was in America: I am now
in a country where the common rights of mankind are known and
regarded.” Granville Sharpe filled the ear of the judges with the
sound principles that had from time to time been affirmed by the
legal authorities: “Derived power cannot be superior to the power
from which it is derived:” “The reasonableness of the law is the soul
of the law:” “It is better to suffer every evil, than to consent to any.”
Out it would come, the God’s truth, out it came, like a bolt from a
cloud, for all the mumbling of the lawyers. One feels very sensibly in
all this history that a great heart and soul are behind there, superior
to any man, and making use of each, in turn, and infinitely attractive
to every person according to the degree of reason in his own mind,
so that this cause has had the power to draw to it every particle of
talent and of worth in England, from the beginning. All the great
geniuses of the British senate, Fox, Pitt, Burke, Grenville, Sheridan,
Grey, Canning, ranged themselves on its side; the poet Cowper
wrote for it: Franklin, Jefferson, Washington, in this country, all
recorded their votes. All men remember the subtlety and the fire of
indignation which the “Edinburgh Review” contributed to the cause;
and every liberal mind, poet, preacher, moralist, statesman, has had
the fortune to appear somewhere for this cause. On the other part,
appeared the reign of pounds and shillings, and all manner of rage
and stupidity; a resistance which drew from Mr. Huddlestone in
Parliament the observation, “That a curse attended this trade even in
the mode of defending it. By a certain fatality, none but the vilest
arguments were brought forward, which corrupted the very persons
who used them. Every one of these was built on the narrow ground
of interest, of pecuniary profit, of sordid gain, in opposition to every
motive that had reference to humanity, justice, and religion, or to that
great principle which comprehended them all.” This moral force
perpetually reinforces and dignifies the friends of this cause. It gave
that tenacity to their point which has insured ultimate triumph; and it
gave that superiority in reason, in imagery, in eloquence, which
makes in all countries anti-slavery meetings so attractive to the
people, and has made it a proverb in Massachusetts, that
“eloquence is dog-cheap at the anti-slavery chapel.”
I will say further that we are indebted mainly to this movement and
to the continuers of it, for the popular discussion of every point of
practical ethics, and a reference of every question to the absolute
standard. It is notorious that the political, religious and social
schemes, with which the minds of men are now most occupied, have
been matured, or at least broached, in the free and daring
discussions of these assemblies. Men have become aware, through
the emancipation and kindred events, of the presence of powers
which, in their days of darkness, they had overlooked. Virtuous men
will not again rely on political agents. They have found out the
deleterious effect of political association. Up to this day we have
allowed to statesmen a paramount social standing, and we bow low
to them as to the great. We cannot extend this deference to them
any longer. The secret cannot be kept, that the seats of power are
filled by underlings, ignorant, timid and selfish to a degree to destroy
all claim, excepting that on compassion, to the society of the just and
generous. What happened notoriously to an American ambassador
in England, that he found himself compelled to palter and to disguise
the fact that he was a slave-breeder, happens to men of state. Their
vocation is a presumption against them among well-meaning people.
The superstition respecting power and office is going to the ground.
The stream of human affairs flows its own way, and is very little
affected by the activity of legislators. What great masses of men
wish done, will be done; and they do not wish it for a freak, but
because it is their state and natural end. There are now other
energies than force, other than political, which no man in future can
allow himself to disregard. There is direct conversation and
influence. A man is to make himself felt by his proper force. The
tendency of things runs steadily to this point, namely, to put every
man on his merits, and to give him so much power as he naturally
exerts,—no more, no less. Of course, the timid and base persons, all
who are conscious of no worth in themselves, and who owe all their
place to the opportunities which the older order of things allowed
them, to deceive and defraud men, shudder at the change, and
would fain silence every honest voice, and lock up every house
where liberty and innovation can be pleaded for. They would raise
mobs, for fear is very cruel. But the strong and healthy yeomen and
husbands of the land, the self-sustaining class of inventive and
industrious men, fear no competition or superiority. Come what will,
their faculty cannot be spared.
The First of August marks the entrance of a new element into
modern politics, namely, the civilization of the negro. A man is added
to the human family. Not the least affecting part of this history of
abolition is the annihilation of the old indecent nonsense about the
nature of the negro. In the case of the ship Zong, in 1781, whose
master had thrown one hundred and thirty-two slaves alive into the
sea, to cheat the underwriters, the first jury gave a verdict in favor of
the master and owners: they had a right to do what they had done.
Lord Mansfield is reported to have said on the bench, “The matter
left to the jury is,—Was it from necessity? For they had no doubt—
though it shocks one very much—that the case of slaves was the
same as if horses had been thrown overboard. It is a very shocking
case.” But a more enlightened and humane opinion began to prevail.
Mr. Clarkson, early in his career, made a collection of African
productions and manufactures, as specimens of the arts and culture
of the negro; comprising cloths and loom, weapons, polished stones
and woods, leather, glass, dyes, ornaments, soap, pipe-bowls and
trinkets. These he showed to Mr. Pitt, who saw and handled them
with extreme interest. “On sight of these,” says Clarkson, “many
sublime thoughts seemed to rush at once into his mind, some of
which he expressed;” and hence appeared to arise a project which
was always dear to him, of the civilization of Africa,—a dream which
forever elevates his fame. In 1791, Mr. Wilberforce announced to the
House of Commons, “We have already gained one victory: we have
obtained for these poor creatures the recognition of their human
nature, which for a time was most shamefully denied them.” It was
the sarcasm of Montesquieu, “it would not do to suppose that
negroes were men, lest it should turn out that whites were not;” for
the white has, for ages, done what he could to keep the negro in that
hoggish state. His laws have been furies. It now appears that the
negro race is, more than any other, susceptible of rapid civilization.
The emancipation is observed, in the islands, to have wrought for the
negro a benefit as sudden as when a thermometer is brought out of
the shade into the sun. It has given him eyes and ears. If, before, he
was taxed with such stupidity, or such defective vision, that he could
not set a table square to the walls of an apartment, he is now the
principal if not the only mechanic in the West Indies; and is, besides,
an architect, a physician, a lawyer, a magistrate, an editor, and a
valued and increasing political power. The recent testimonies of
Sturge, of Thome and Kimball, of Gurney, of Philippo, are very
explicit on this point, the capacity and the success of the colored and
the black population in employments of skill, of profit and of trust;
and best of all is the testimony to their moderation. They receive
hints and advances from the whites that they will be gladly received
as subscribers to the Exchange, as members of this or that
committee of trust. They hold back, and say to each other that
“social position is not to be gained by pushing.”
I have said that this event interests us because it came mainly
from the concession of the whites; I add, that in part it is the earning
of the blacks. They won the pity and respect which they have
received, by their powers and native endowments. I think this a
circumstance of the highest import. Their whole future is in it. Our
planet, before the age of written history, had its races of savages,
like the generations of sour paste, or the animalcules that wiggle and
bite in a drop of putrid water. Who cares for these or for their wars?
We do not wish a world of bugs or of birds; neither afterward of
Scythians, Caraibs or Feejees. The grand style of Nature, her great
periods, is all we observe in them. Who cares for oppressing whites,
or oppressed blacks, twenty centuries ago, more than for bad
dreams? Eaters and food are in the harmony of Nature; and there
too is the germ forever protected, unfolding gigantic leaf after leaf, a
newer flower, a richer fruit, in every period, yet its next product is
never to be guessed. It will only save what is worth saving; and it
saves not by compassion, but by power. It appoints no police to
guard the lion but his teeth and claws; no fort or city for the bird but
his wings; no rescue for flies and mites but their spawning numbers,
which no ravages can overcome. It deals with men after the same
manner. If they are rude and foolish, down they must go. When at
last in a race a new principle appears, an idea,—that conserves it;
ideas only save races. If the black man is feeble and not important to
the existing races, not on a parity with the best race, the black man
must serve, and be exterminated.[116] But if the black man carries in
his bosom an indispensable element of a new and coming
civilization; for the sake of that element, no wrong nor strength nor
circumstance can hurt him: he will survive and play his part. So now,
the arrival in the world of such men as Toussaint, and the Haytian
heroes, or of the leaders of their race in Barbadoes and Jamaica,
outweighs in good omen all the English and American humanity. The
anti-slavery of the whole world is dust in the balance before this,—is
a poor squeamishness and nervousness: the might and the right are
here: here is the anti-slave: here is man: and if you have man, black
or white is an insignificance. The intellect,—that is miraculous! Who
has it, has the talisman: his skin and bones, though they were of the
color of night, are transparent, and the everlasting stars shine
through, with attractive beams. But a compassion for that which is
not and cannot be useful or lovely, is degrading and futile. All the
songs and newspapers and money subscriptions and vituperation of
such as do not think with us, will avail nothing against a fact. I say to
you, you must save yourself, black or white, man or woman; other
help is none. I esteem the occasion of this jubilee to be the proud
discovery that the black race can contend with the white: that in the
great anthem which we call history, a piece of many parts and vast
compass, after playing a long time a very low and subdued
accompaniment, they perceive the time arrived when they can strike
in with effect and take a master’s part in the music. The civility of the
world has reached that pitch that their more moral genius is
becoming indispensable, and the quality of this race is to be honored
for itself. For this, they have been preserved in sandy deserts, in
rice-swamps, in kitchens and shoe-shops, so long: now let them
emerge, clothed and in their own form.
There remains the very elevated consideration which the subject
opens, but which belongs to more abstract views than we are now
taking, this, namely, that the civility of no race can be perfect whilst
another race is degraded. It is a doctrine alike of the oldest and of
the newest philosophy, that man is one, and that you cannot injure
any member, without a sympathetic injury to all the members.
America is not civil, whilst Africa is barbarous.[117]
These considerations seem to leave no choice for the action of the
intellect and the conscience of the country. There have been
moments in this, as well as in every piece of moral history, when
there seemed room for the infusions of a skeptical philosophy; when
it seemed doubtful whether brute force would not triumph in the
eternal struggle. I doubt not that, sometimes, a despairing negro,
when jumping over the ship’s sides to escape from the white devils
who surrounded him, has believed there was no vindication of right;
it is horrible to think of, but it seemed so. I doubt not that sometimes
the negro’s friend, in the face of scornful and brutal hundreds of
traders and drivers, has felt his heart sink. Especially, it seems to
me, some degree of despondency is pardonable, when he observes
the men of conscience and of intellect, his own natural allies and
champions,—those whose attention should be nailed to the grand
objects of this cause, so hotly offended by whatever incidental
petulances or infirmities of indiscreet defenders of the negro, as to
permit themselves to be ranged with the enemies of the human race;
and names which should be the alarums of liberty and the
watchwords of truth, are mixed up with all the rotten rabble of
selfishness and tyranny.[118] I assure myself that this coldness and
blindness will pass away. A single noble wind of sentiment will
scatter them forever. I am sure that the good and wise elders, the
ardent and generous youth, will not permit what is incidental and
exceptional to withdraw their devotion from the essential and
permanent characters of the question. There have been moments, I
said, when men might be forgiven who doubted. Those moments are
past. Seen in masses, it cannot be disputed, there is progress in
human society. There is a blessed necessity by which the interest of
men is always driving them to the right; and, again, making all crime
mean and ugly. The genius of the Saxon race, friendly to liberty; the
enterprise, the very muscular vigor of this nation, are inconsistent
with slavery. The Intellect, with blazing eye, looking through history
from the beginning onward, gazes on this blot and it disappears. The
sentiment of Right, once very low and indistinct, but ever more
articulate, because it is the voice of the universe, pronounces
Freedom. The Power that built this fabric of things affirms it in the
heart; and in the history of the First of August, has made a sign to
the ages, of his will.
V
WAR
The archangel Hope

Looks to the azure cope,
Waits through dark ages for the morn,
Defeated day by day, but unto Victory born.
WAR
It has been a favorite study of modern philosophy to indicate the
steps of human progress, to watch the rising of a thought in one
man’s mind, the communication of it to a few, to a small minority, its
expansion and general reception, until it publishes itself to the world
by destroying the existing laws and institutions, and the generation of
new. Looked at in this general and historical way, many things wear
a very different face from that they show near by, and one at a time,
—and, particularly, war. War, which to sane men at the present day
begins to look like an epidemic insanity, breaking out here and there
like the cholera or influenza, infecting men’s brains instead of their
bowels,—when seen in the remote past, in the infancy of society,
appears a part of the connection of events, and, in its place,
necessary.
As far as history has preserved to us the slow unfoldings of any
savage tribe, it is not easy to see how war could be avoided by such
wild, passionate, needy, ungoverned, strong-bodied creatures. For in
the infancy of society, when a thin population and improvidence
make the supply of food and of shelter insufficient and very
precarious, and when hunger, thirst, ague and frozen limbs
universally take precedence of the wants of the mind and the heart,
the necessities of the strong will certainly be satisfied at the cost of
the weak, at whatever peril of future revenge. It is plain, too, that in
the first dawnings of the religious sentiment, that blends itself with
their passions and is oil to the fire. Not only every tribe has war-
gods, religious festivals in victory, but religious wars.
The student of history acquiesces the more readily in this copious
bloodshed of the early annals, bloodshed in God’s name too, when
he learns that it is a temporary and preparatory state, and does
actively forward the culture of man. War educates the senses, calls
into action the will, perfects the physical constitution, brings men into
such swift and close collision in critical moments that man measures
man. On its own scale, on the virtues it loves, it endures no
counterfeit, but shakes the whole society until every atom falls into
the place its specific gravity assigns it.[119] It presently finds the
value of good sense and of foresight, and Ulysses takes rank next to
Achilles. The leaders, picked men of a courage and vigor tried and
augmented in fifty battles, are emulous to distinguish themselves
above each other by new merits, as clemency, hospitality, splendor
of living. The people imitate the chiefs. The strong tribe, in which war
has become an art, attack and conquer their neighbors, and teach
them their arts and virtues. New territory, augmented numbers and
extended interests call out new virtues and abilities, and the tribe
makes long strides. And, finally, when much progress has been
made, all its secrets of wisdom and art are disseminated by its
invasions. Plutarch, in his essay On the Fortune of Alexander,
considers the invasion and conquest of the East by Alexander as
one of the most bright and pleasing pages in history; and it must be
owned he gives sound reason for his opinion. It had the effect of
uniting into one great interest the divided commonwealths of Greece,
and infusing a new and more enlarged public spirit into the councils
of their statesmen. It carried the arts and language and philosophy of
the Greeks into the sluggish and barbarous nations of Persia,
Assyria and India. It introduced the arts of husbandry among tribes
of hunters and shepherds. It weaned the Scythians and Persians
from some cruel and licentious practices to a more civil way of life. It
introduced the sacredness of marriage among them. It built seventy
cities, and sowed the Greek customs and humane laws over Asia,
and united hostile nations under one code. It brought different
families of the human race together,—to blows at first, but afterwards
to truce, to trade and to intermarriage. It would be very easy to show
analogous benefits that have resulted from military movements of
later ages.
Considerations of this kind lead us to a true view of the nature and
office of war. We see it is the subject of all history; that it has been
the principal employment of the most conspicuous men; that it is at
this moment the delight of half the world, of almost all young and
ignorant persons; that it is exhibited to us continually in the dumb
show of brute nature, where war between tribes, and between
individuals of the same tribe, perpetually rages. The microscope
reveals miniature butchery in atomies and infinitely small biters that
swim and fight in an illuminated drop of water; and the little globe is
but a too faithful miniature of the large.
What does all this war, beginning from the lowest races and
reaching up to man, signify? Is it not manifest that it covers a great
and beneficent principle, which Nature had deeply at heart? What is
that principle?—It is self-help. Nature implants with life the instinct of
self-help, perpetual struggle to be, to resist opposition, to attain to
freedom, to attain to a mastery and the security of a permanent, self-
defended being; and to each creature these objects are made so
dear that it risks its life continually in the struggle for these ends.
But whilst this principle, necessarily, is inwrought into the fabric of
every creature, yet it is but one instinct; and though a primary one, or
we may say the very first, yet the appearance of the other instincts
immediately modifies and controls this; turns its energies into
harmless, useful and high courses, showing thereby what was its
ultimate design; and, finally, takes out its fangs. The instinct of self-
help is very early unfolded in the coarse and merely brute form of
war, only in the childhood and imbecility of the other instincts, and
remains in that form only until their development. It is the ignorant
and childish part of mankind that is the fighting part. Idle and vacant
minds want excitement, as all boys kill cats. Bull-baiting, cockpits
and the boxer’s ring are the enjoyment of the part of society whose
animal nature alone has been developed. In some parts of this
country, where the intellectual and moral faculties have as yet
scarcely any culture, the absorbing topic of all conversation is
whipping; who fought, and which whipped? Of man, boy or beast,
the only trait that much interests the speakers is the pugnacity.[120]
And why? Because the speaker has as yet no other image of manly
activity and virtue, none of endurance, none of perseverance, none
of charity, none of the attainment of truth. Put him into a circle of
cultivated men, where the conversation broaches the great questions
that besiege the human reason, and he would be dumb and
unhappy, as an Indian in church.
To men of a sedate and mature spirit, in whom is any knowledge
or mental activity, the detail of battle becomes insupportably tedious
and revolting. It is like the talk of one of those monomaniacs whom
we sometimes meet in society, who converse on horses; and
Fontenelle expressed a volume of meaning when he said, “I hate
war, for it spoils conversation.”
Nothing is plainer than that the sympathy with war is a juvenile and
temporary state. Not only the moral sentiment, but trade, learning
and whatever makes intercourse, conspire to put it down. Trade, as
all men know, is the antagonist of war. Wherever there is no
property, the people will put on the knapsack for bread; but trade is
instantly endangered and destroyed. And, moreover, trade brings
men to look each other in the face, and gives the parties the
knowledge that these enemies over sea or over the mountain are
such men as we; who laugh and grieve, who love and fear, as we do.
And learning and art, and especially religion weave ties that make
war look like fratricide, as it is. And as all history is the picture of war,
as we have said, so it is no less true that it is the record of the
mitigation and decline of war. Early in the eleventh and twelfth
centuries, the Italian cities had grown so populous and strong that
they forced the rural nobility to dismantle their castles, which were
dens of cruelty, and come and reside in the towns. The popes, to
their eternal honor, declared religious jubilees, during which all
hostilities were suspended throughout Christendom, and man had a
breathing space. The increase of civility has abolished the use of
poison and of torture, once supposed as necessary as navies now.
And, finally, the art of war, what with gunpowder and tactics, has
made, as all men know, battles less frequent and less murderous.
By all these means, war has been steadily on the decline; and we
read with astonishment of the beastly fighting of the old times. Only
in Elizabeth’s time, out of the European waters, piracy was all but
universal. The proverb was,—“No peace beyond the line;” and the
seaman shipped on the buccaneer’s bargain, “No prey, no pay.” The
celebrated Cavendish, who was thought in his times a good
Christian man, wrote thus to Lord Hunsdon, on his return from a
voyage round the world: “Sept. 1588. It hath pleased Almighty God
to suffer me to circumpass the whole globe of the world, entering in
at the Strait of Magellan, and returning by the Cape of Buena
Esperança; in which voyage, I have either discovered or brought
certain intelligence of all the rich places of the world, which were
ever discovered by any Christian. I navigated along the coast of
Chili, Peru, and New Spain, where I made great spoils. I burnt and
sunk nineteen sail of ships, small and great. All the villages and
towns that ever I landed at, I burned and spoiled. And had I not been
discovered upon the coast, I had taken great quantity of treasure.
The matter of most profit to me was a great ship of the king’s, which I
took at California,” etc. And the good Cavendish piously begins this
statement,—“It hath pleased Almighty God.”
Indeed, our American annals have preserved the vestiges of
barbarous warfare down to more recent times. I read in Williams’s
History of Maine, that “Assacombuit, the Sagamore of the
Anagunticook tribe, was remarkable for his turpitude and ferocity
above all other known Indians; that, in 1705, Vaudreuil sent him to
France, where he was introduced to the king. When he appeared at
court, he lifted up his hand and said, ‘This hand has slain a hundred
and fifty of your majesty’s enemies within the territories of New
England.’ This so pleased the king that he knighted him, and ordered
a pension of eight livres a day to be paid him during life.” This
valuable person, on his return to America, took to killing his own
neighbors and kindred, with such appetite that his tribe combined
against him, and would have killed him had he not fled his country
forever.
The scandal which we feel in such facts certainly shows that we
have got on a little. All history is the decline of war, though the slow
decline. All that society has yet gained is mitigation: the doctrine of
the right of war still remains.
For ages (for ideas work in ages, and animate vast societies of
men) the human race has gone on under the tyranny—shall I so call
it?—of this first brutish form of their effort to be men; that is, for ages
they have shared so much of the nature of the lower animals, the
tiger and the shark, and the savages of the water-drop. They have
nearly exhausted all the good and all the evil of this form: they have
held as fast to this degradation as their worst enemy could desire;
but all things have an end, and so has this.[121] The eternal
germination of the better has unfolded new powers, new instincts,
which were really concealed under this rough and base rind. The
sublime question has startled one and another happy soul in
different quarters of the globe,—Cannot love be, as well as hate?
Would not love answer the same end, or even a better? Cannot
peace be, as well as war?
This thought is no man’s invention, neither St. Pierre’s nor
Rousseau’s, but the rising of the general tide in the human soul,—
and rising highest, and first made visible, in the most simple and
pure souls, who have therefore announced it to us beforehand; but
presently we all see it. It has now become so distinct as to be a
social thought: societies can be formed on it. It is expounded,
illustrated, defined, with different degrees of clearness; and its
actualization, or the measures it should inspire, predicted according
to the light of each seer.
The idea itself is the epoch; the fact that it has become so distinct
to any small number of persons as to become a subject of prayer
and hope, of concert and discussion,—that is the commanding fact.
This having come, much more will follow. Revolutions go not
backward. The star once risen, though only one man in the
hemisphere has yet seen its upper limb in the horizon, will mount
and mount, until it becomes visible to other men, to multitudes, and
climbs the zenith of all eyes. And so it is not a great matter how long
men refuse to believe the advent of peace: war is on its last legs;
and a universal peace is as sure as is the prevalence of civilization
over barbarism, of liberal governments over feudal forms. The
question for us is only How soon?
That the project of peace should appear visionary to great
numbers of sensible men; should appear laughable even, to
numbers; should appear to the grave and good-natured to be
embarrassed with extreme practical difficulties,—is very natural.
‘This is a poor, tedious society of yours,’ they say: ‘we do not see
what good can come of it. Peace! why, we are all at peace now. But
if a foreign nation should wantonly insult or plunder our commerce,
or, worse yet, should land on our shores to rob and kill, you would
not have us sit, and be robbed and killed? You mistake the times;
you overestimate the virtue of men. You forget that the quiet which
now sleeps in cities and in farms, which lets the wagon go
unguarded and the farmhouse unbolted, rests on the perfect
understanding of all men that the musket, the halter and the jail
stand behind there, ready to punish any disturber of it. All admit that
this would be the best policy, if the world were all a church, if all the
men were the best men, if all would agree to accept this rule. But it is
absurd for one nation to attempt it alone.’[122]
In the first place, we answer that we never make much account of
objections which merely respect the actual state of the world at this
moment, but which admit the general expediency and permanent
excellence of the project. What is the best must be the true; and
what is true—that is, what is at bottom fit and agreeable to the
constitution of man—must at last prevail over all obstruction and all
opposition. There is no good now enjoyed by society that was not
once as problematical and visionary as this. It is the tendency of the
true interest of man to become his desire and steadfast aim.
But, further, it is a lesson which all history teaches wise men, to
put trust in ideas, and not in circumstances. We have all grown up in
the sight of frigates and navy-yards, of armed forts and islands, of
arsenals and militia. The reference to any foreign register will inform
us of the number of thousand or million men that are now under
arms in the vast colonial system of the British Empire, of Russia,
Austria and France; and one is scared to find at what a cost the
peace of the globe is kept. This vast apparatus of artillery, of fleets,
of stone bastions and trenches and embankments; this incessant
patrolling of sentinels; this waving of national flags; this reveille and
evening gun; this martial music and endless playing of marches and
singing of military and naval songs seem to us to constitute an
imposing actual, which will not yield in centuries to the feeble,
deprecatory voices of a handful of friends of peace.
Thus always we are daunted by the appearances; not seeing that
their whole value lies at bottom in the state of mind. It is really a
thought that built this portentous war-establishment, and a thought
shall also melt it away.[123] Every nation and every man instantly
surround themselves with a material apparatus which exactly
corresponds to their moral state, or their state of thought. Observe
how every truth and every error, each a thought of some man’s mind,
clothes itself with societies, houses, cities, language, ceremonies,
newspapers. Observe the ideas of the present day,—orthodoxy,
skepticism, missions, popular education, temperance, anti-masonry,
anti-slavery; see how each of these abstractions has embodied itself
in an imposing apparatus in the community; and how timber, brick,
lime and stone have flown into convenient shape, obedient to the
master-idea reigning in the minds of many persons.[124]
You shall hear, some day, of a wild fancy which some man has in
his brain, of the mischief of secret oaths. Come again one or two
years afterwards, and you shall see it has built great houses of solid
wood and brick and mortar. You shall see a hundred presses printing
a million sheets; you shall see men and horses and wheels made to
walk, run and roll for it: this great body of matter thus executing that
one man’s wild thought. This happens daily, yearly about us, with
half thoughts, often with flimsy lies, pieces of policy and speculation.
With good nursing they will last three or four years before they will
come to nothing. But when a truth appears,—as, for instance, a
perception in the wit of one Columbus that there is land in the
Western Sea; though he alone of all men has that thought, and they
all jeer,—it will build ships; it will build fleets; it will carry over half
Spain and half England; it will plant a colony, a state, nations and
half a globe full of men.
We surround ourselves always, according to our freedom and
ability, with true images of ourselves in things, whether it be ships or
books or cannons or churches. The standing army, the arsenal, the
camp and the gibbet do not appertain to man. They only serve as an
index to show where man is now; what a bad, ungoverned temper he
has; what an ugly neighbor he is; how his affections halt; how low his
hope lies. He who loves the bristle of bayonets only sees in their
glitter what beforehand he feels in his heart. It is avarice and hatred;
it is that quivering lip, that cold, hating eye, which built magazines
and powder-houses.
It follows of course that the least change in the man will change
his circumstances; the least enlargement of his ideas, the least
mitigation of his feelings in respect to other men; if, for example, he
could be inspired with a tender kindness to the souls of men, and
should come to feel that every man was another self with whom he
might come to join, as left hand works with right. Every degree of the
ascendency of this feeling would cause the most striking changes of
external things: the tents would be struck; the men-of-war would rot
ashore; the arms rust; the cannon would become street-posts; the
pikes, a fisher’s harpoon; the marching regiment would be a caravan
of emigrants, peaceful pioneers at the fountains of the Wabash and
the Missouri. And so it must and will be: bayonet and sword must
first retreat a little from their ostentatious prominence; then quite hide
themselves, as the sheriff’s halter does now, inviting the attendance
only of relations and friends; and then, lastly, will be transferred to
the museums of the curious, as poisoning and torturing tools are at
this day.
War and peace thus resolve themselves into a mercury of the
state of cultivation. At a certain stage of his progress, the man fights,
if he be of a sound body and mind. At a certain higher stage, he
makes no offensive demonstration, but is alert to repel injury, and of
an unconquerable heart.[125] At a still higher stage, he comes into
the region of holiness; passion has passed away from him; his
warlike nature is all converted into an active medicinal principle; he
sacrifices himself, and accepts with alacrity wearisome tasks of
denial and charity; but, being attacked, he bears it and turns the
other cheek, as one engaged, throughout his being, no longer to the
service of an individual but to the common soul of all men.
Since the peace question has been before the public mind, those
who affirm its right and expediency have naturally been met with
objections more or less weighty. There are cases frequently put by
the curious,—moral problems, like those problems in arithmetic
which in long winter evenings the rustics try the hardness of their
heads in ciphering out. And chiefly it is said,—Either accept this
principle for better, for worse, carry it out to the end, and meet its
absurd consequences; or else, if you pretend to set an arbitrary limit,
a “Thus far, no farther,” then give up the principle, and take that limit
which the common sense of all mankind has set, and which
distinguishes offensive war as criminal, defensive war as just.
Otherwise, if you go for no war, then be consistent, and give up self-
defence in the highway, in your own house. Will you push it thus far?
Will you stick to your principle of non-resistance when your strong-
box is broken open, when your wife and babes are insulted and
slaughtered in your sight? If you say yes, you only invite the robber
and assassin; and a few bloody-minded desperadoes would soon
butcher the good.
In reply to this charge of absurdity on the extreme peace doctrine,
as shown in the supposed consequences, I wish to say that such
deductions consider only one half of the fact. They look only at the
passive side of the friend of peace, only at his passivity; they quite
omit to consider his activity. But no man, it may be presumed, ever
embraced the cause of peace and philanthropy for the sole end and
satisfaction of being plundered and slain. A man does not come the
length of the spirit of martyrdom without some active purpose, some
equal motive, some flaming love. If you have a nation of men who
have risen to that height of moral cultivation that they will not declare
war or carry arms, for they have not so much madness left in their
brains, you have a nation of lovers, of benefactors, of true, great and
able men. Let me know more of that nation; I shall not find them
defenceless, with idle hands swinging at their sides. I shall find them
men of love, honor and truth; men of an immense industry; men
whose influence is felt to the end of the earth; men whose very look
and voice carry the sentence of honor and shame; and all forces
yield to their energy and persuasion. Whenever we see the doctrine
of peace embraced by a nation, we may be assured it will not be one
that invites injury; but one, on the contrary, which has a friend in the
bottom of the heart of every man, even of the violent and the base;
one against which no weapon can prosper; one which is looked upon
as the asylum of the human race and has the tears and the
blessings of mankind.
In the second place, as far as it respects individual action in
difficult and extreme cases, I will say, such cases seldom or never
occur to the good and just man; nor are we careful to say, or even to
know, what in such crises is to be done. A wise man will never
impawn his future being and action, and decide beforehand what he
shall do in a given extreme event. Nature and God will instruct him in
that hour.
The question naturally arises, How is this new aspiration of the
human mind to be made visible and real? How is it to pass out of
thoughts into things?
Not, certainly, in the first place, in the way of routine and mere
forms,—the universal specific of modern politics; not by organizing a
society, and going through a course of resolutions and public
manifestoes, and being thus formally accredited to the public and to
the civility of the newspapers. We have played this game to
tediousness. In some of our cities they choose noted duellists as
presidents and officers of anti-duelling societies. Men who love that
bloated vanity called public opinion think all is well if they have once
got their bantling through a sufficient course of speeches and
cheerings, of one, two, or three public meetings; as if they could do
anything: they vote and vote, cry hurrah on both sides, no man
responsible, no man caring a pin. The next season, an Indian war, or
an aggression on our commerce by Malays; or the party this man
votes with have an appropriation to carry through Congress: instantly
he wags his head the other way, and cries, Havoc and war!
This is not to be carried by public opinion, but by private opinion,
by private conviction, by private, dear and earnest love. For the only
hope of this cause is in the increased insight, and it is to be
accomplished by the spontaneous teaching, of the cultivated soul, in
its secret experience and meditation,—that it is now time that it
should pass out of the state of beast into the state of man; it is to
hear the voice of God, which bids the devils that have rended and
torn him come out of him and let him now be clothed and walk forth
in his right mind.
Nor, in the next place, is the peace principle to be carried into
effect by fear. It can never be defended, it can never be executed, by
cowards. Everything great must be done in the spirit of greatness.
The manhood that has been in war must be transferred to the cause
of peace, before war can lose its charm, and peace be venerable to
men.
The attractiveness of war shows one thing through all the throats
of artillery, the thunders of so many sieges, the sack of towns, the
jousts of chivalry, the shock of hosts,—this namely, the conviction of
man universally, that a man should be himself responsible, with
goods, health and life, for his behavior; that he should not ask of the
state protection; should ask nothing of the state; should be himself a
kingdom and a state; fearing no man; quite willing to use the
opportunities and advantages that good government throw in his
way, but nothing daunted, and not really the poorer if government,
law and order went by the board; because in himself reside infinite
resources; because he is sure of himself, and never needs to ask
another what in any crisis it behooves him to do.[126]
What makes to us the attractiveness of the Greek heroes? of the
Roman? What makes the attractiveness of that romantic style of
living which is the material of ten thousand plays and romances,
from Shakspeare to Scott; the feudal baron, the French, the English
nobility, the Warwicks, Plantagenets? It is their absolute self-
dependence. I do not wonder at the dislike some of the friends of

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(eBook PDF) Fundamental Accounting

Principles Volume 2 16th Canadian

CHAPTER 9 Property, Plant, and Equipment and Intangibles 604

CHAPTER 11 Dividends 818

Exercises 894 Knowledge Check-Up 962

INSIDE THE CHAPTERS

Read–Do–Check–Apply reinforces active learning rather than passive

Critical Thinking Challenge

IFRS AND ASPE—THE DIFFERENCES IFRS and ASPE—The Differences

Food Truck Frenzy

Video Links: http://www.cbc.ca/dragonsden/pitches/caplanskys-deli and https://youtu.be/cN_8HMMnNFk.

A Look Back, A Look at This

Lar54656_ch01_001-077.indd Page 8 1/10/19 5:13 PM f-0016 PREFACE

This series of questions within the chap- 5.

by referencing what they have just

Ethical Impact ETHICAL IMPACT

problem solving and decision making,

generation of socially conscious students.

ing’s role in ethics and social responsibility is de-

Decision Maker Guidance Answer to DECISION MAKER

fessional and ethical behaviour, problem

Extend Your Knowledge (EYK)

Stretching our wings

process. The audited annual financial

dited financial statements are presented THOSE WHO BELIEVE IN THE

without notes, and weblinks are provided

Guidance Answer to DECISION MAKER Guidance Answers to Decision Maker

Guidance Answers to CHECKPOINT

The Checkpoint material throughout the chapter allows 5.

Student Success Cycle. Merchandise Inventory ...............................................................

comprehension through a 10-question multiple- period.

structor Resources link on Connect.

These problems reinforce the chapter material and

CONCEPT REVIEW QUESTIONS

QUICK STUDY Quick Study

Exercises Exercise 6-3 Specific identification cost flow assumption LO2

. These have Excel templates located on

Limited liability lems and Alternate or B problems. B Problems

Owners are partners ing through repetition.

Taxed as a separate legal entity

Lar54656_ch02_078-153.indd Page 151 12/27/18 2:03 PM f-0016 /203/MHR00306/Lar54656_disk1of1/1259654656/Lar54656_pagefiles

FOCUS ON FINANCIAL STATEMENTS

CRITICAL THINKING MINI CASE

the Student Success Cycle. Sales revenue* ............................................................ $56,000

*Sales invoices attached

GENERAL UPDATES beginning of each lecture to encourage students

• New Decision Insight on crowdfunding—outlining Chapter 12

Market Leading Technology

LEARN WITHOUT LIMITS

CONNECT KEY FEATURES:

Simple Assignment Management

The archangel Hope

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