RSM 320 FALL 20 18

LAST (Family) NAME:

FIRST (Given) NAME:

UNIVERSITY OF TORONTO

Faculty of Arts & Science

& Rotman School of Management

DECEMBER 2018 EXAMINATIONS

RSM320H1 F -Intermediate Financial Accounting Ill

Duration: 3 hours

Aids Allowed: Non-Programmable Calculator

Exam Reminders:

• Write your name and student number on the top of this page and on the front page of your exam
materials.
• Do not begin writing the actual exam until the announcements have ended and the Exam
Facilitator has started the exam .
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unauthorized aid during an exam, you may be charged with an academic offence.
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materials in your bag under your desk. If it is left in your pocket, it may be an academic offence.
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not collect your bag and jacket before your exam is handed in.
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Facilitator so it can be recorded before leaving the exam hall.
• In the event of a fire alarm, do not check your cell phone when escorted outside.

RSM 320H1 F - Final Exam Page 1 of 21

RSM 320 FALL 201 8

Exam Format and Grading Scheme:

THIS EXAMINATION CONSISTS OF THREE PARTS AND 21 PAGES. PART A, WORTH 45

MARKS, INCLUDES FIVE COMPULSORY SHORT ESSAY-TYPE QUESTIONS. PART B,
WORTH 25 MARKS, CONSISTS OF TWO COMPULSORY TECHNICAL QUESTIONS. PART
C, WORTH 30 MARKS, CONTAINS A CHOICE: OF THE TWO AVAILABLE QUESTIONS IN
PART C, DO ONLY ONE.

Students must hand in all examination materials at the end

RSM 320H 1F - Final Exam Page 2 of 21

RSM 320 FALL 20 18

I PART A OF THE EXAMINATION: FIVE COMPULSORY QUESTIONS

A TOT AL OF 45 MARKS ARE AVAILABLE IN THIS PART OF THE EXAMINATION

QUESTION lA [9 MARKS)

In 2017 CPA Canada published a document entitled "Blockchain Technology and Its Potential
Impact on the Audit and Assurnnce Profession", two excerpts of which follow (footnotes
omitted):

FROM PAGES 3 AND 4:

What Is Blockchain Technology?

A blockchain is a digital ledger created to capture transacbons conducted among various
parties in a network. It is a peer-to-peer. Internet-based distributed ledger which includes all
transactions since its creation. All participants (i.e., individuals o r businesses) using the shared
5
database a.re "nodes" connected to the blockchain. each maintaining an identic.al copy of the
ledger. EvGry entry into a blockchain is a transadion_that represents an exchange of value
between participants (Le., a digital asset that represents rights, obligations or ownership). In
practice, many different types of b!ockchains are being developed and tested. However. most
blockchains follow this general framework and approach.

When one participant wants to send value to another, all the other nodas in the network
communicate with each other using a pm-determined mechanism to check that the new
transaction is valid. This mechanism is referred t o as a c.onsensus algolithm.6 Once a t rans-
action has been accepted by the network, all copies of the ledger are updated with the
new information. Multiple transactions ara usually combined into a "block" that is added to
the redger. ~ach block contains information that refers back to previous blocks and thus all
blocks in the cha[n link together in the distributed identical copies. Participating nodes can
add new, time-stamped transactions, but participants cannot delete or alter the entries once
they have been validated and accepted by the network. If a node modified a previous block.
it would not sync w ith the rest of the network and would be excluded from the blockchain.
A property functioning bloc.kchain is thus immutable despite lacking a central administrator.

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RSM 320 FALL 20 18

Characteristics of a Blockchain
As a near real-time and distributed digital ledger, a blockchain has several unique and valu-
able characteristics that, over time, could transform a wide range of indusbies:

Near real-tlmo sottlement A btockchain enables the near real-time settlement of transactions,
thus re-:fucing risk of non-payment by one party to the transaction.
I

Distributed ledger The peer-tcr-peer distributed network contains a public history of

t7am;acti<>r1s. A blockchain is distributed. highly aYailabfe and retains
a rocure record ot prom that the transaction occurred.

A blockchain contains a verifiable record of e"lery singl.e transaction

ever made on that bfoc:kdiain. This prevents doubte spellding of the
item tracked by the b lockctlain.

The economic rules. be.lilt into a blockchain model pra-Jide mcinetary

incentives f« the independent participants to col"ltinue validating
n!!'N blocks.. This means a blockcha1n continues to grow without an
"owner". It is also costly b:l cenSM.

FROM PAGE 8:

RSM 320H 1F - Final Exam Page 4 of 21

RSM 320 FALL 2018

Where Can Blockchain Be Applied?

Blockcnain technology offers the potential to impac t a 1Nide range of industries. The most
promising applications exist w here transforring value or assets betwei;m parties is currently
cumbersome, expensive and requires one or more centr.a!ized o rganization. A specific activ-
ity attracting significant interest is securities settlement. which today can involve multi-day
clearing and settlement prooosses between multiple financial intermediaries. Certain financial
services experts believe the financial services industry is on the verge of being disrupted:
advances in innovat ive technotogies. such as blockchain are expected to transform the indus-
try and its workforce by automating many of the activities currently performed by humans.

The table below ilfustrates industries where interest in btockchain t echnology and its potential
transformative benefits has been high. as demonstrated by significant investments from both
venture capital firms and large enterprises.

Several stock exchanges ar<JYnd tile wcxld are piloting a blockchain platform that
enables the issuance and transfer of private securities. Additionally, multiple groups
of banks are con-sidering use cases for trade finance. cross-borde-r payments. and
other banking processes.

Companies in the col"l'Sumer and industrial industries are exploring ttie use ot
blockchain to d ig itize and track the origins and history of transactions in various
commodities.

Healthcare organizations are exploring the use of blockchain to secure the in~egrity
ol electronic medical records. medical billing. claims, and other records.

Governments are exploring blockch;iin to support asset registries soch as land and
corporate shares.

ElMreum is being used to establish smart-grid technology that would allow for
surplus energy l'o be used as tradab!e dig:l:a! assets among const1mer5.

Since all businesses track information and face t he challenge of reconciling data with coun-
terparties, b!oe-kc.hain technology has the potential to be relevant to ever yone. Th9 first major
adoptions. ho wever, may transform business. processes and old legacy sys tems. that are
cumbersome to maintain.

REQUIRED:

Explain the importance of Blockchain technology to financial reporting.

Q UESTION 2A (9 MARKS)

The following infonnation is disclosed on page 74 of Teck Resources Limited's 2017

Management Proxy Circular:

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RSM 320 FALL 2018

Summary of Total Compensation for NEOs

The follo¥1ing table sets out total compensation ror the financial years ending December 31 . 2015.
2016 and 2017 for the Corporation's NEOs, being the President and Chief Exec utive Officer. the
Senior Vice President Finance and Chief Financial Officer and the three other most highly
compensated executive officers of the Corporation or any of its subsidiaries.
I I
Nama and ' I Sala
Principal Year ($)ry
Position ,I

D. R. Lindsay 2 017 1,550,875 2,974,200

President and 2016 1,493,500 2 ,531 ,200
CEO 2015 1,493.500 2,977,800

R . AMillos 2017 662,500 775,200 780, 100 635,900 86,125 0 2,939,825

SVP, Finance 2016 640,000 659,500 662,400 569,900 83, 200 0 2,615,000
and CFO 2015 640,000 775,600 778,700 477,500 83,200 0 2,755.000

P . C . Rozee
2017 662,500 775,200 780,100 634,800 260,000 0 3,112.600
SVP,
commercial 2016 640,000 659,500 662,400 555.800 99.000 0 2,616,700
and Legal 2015 640,000 775.600 778,700 493,800 105,000 0 2 ,793,100
Affairs
M. M . Smith
2017 622,500 648,600 644,500 544,900 80,925 0 2,541,425
SVP,
Sustainability 2016 600,000 547,400 546,500 455, 100 78,000 0 2 ,227,000
& External 2015 600,000 641,500 643,300 394,200 78,000 0 2,357,000
Affairs
A.J. Golding 2017 622.500 648,600 644,500 539,600 80,925 0 2,536,125
SVP, 2016 600,000 547,400 546,500 445,900. 78,000 0 2 ,217,800
Corporate
Development 2015 600,000 641,500 643,300 394,200 78,000 0 2,357,000
Notes:
(1) Share units in the form of OSUs, RSUs, PSUs or POSUs are granted on an annual basis under the Corporation' s share
unit plans. Dividend equivalents are credited to a participant's share unit account in the form of additional DSUs, RSUs ,
PSUs or PDSUs as of each payment date in respect of which cash dividends are paid on the Class B subordinate
voting shares. The units vest on December 20 in the second calendar y ear immediately follow ing the grant. The fa ir
v alue for option based awards is consistent with the accounting fa ir value under IFRS. The fair values for the 2015,
2016 and 2017 grants are $19.15, $5.34 and $27.78, respectively, w hich w as the closing price of the Class B
subordinate vot ing shares on the day prior to the applicable grant date. For share based a wards, the 2015 and 2016
grant fair values are consistent '"ith accounting fai r values under IFRS. Starting from the 2017 grant, share based
awards are v al ued based o n the 20 day volume w eighted average price of Class 8 subordinate voting shares and for
2017, the fair v alue w as $31 .64. (See section on Share Unit P lans on Schedule C).
(2) In 2015 and 2016. Mr. Lindsay elected to further i nvest in Teck by choosing to receiv e h is 2014 and 20 15 annual
incentive cash bonuses, respectively, in the form of DSUs. These DSUs are not reflected in the above table a n d are
not considered long-term equity compensation as they were effectively purchased by Mr. Lindsay with his annual
incentive cash bonuses for 2014 and 2015 on the basis of the then-current meirket price of the Class B subordinate
voling shares rather than being receiv ed as part of his long term equity compensation package. These amounts are
reflected in •Annual Incentiv e Plans".
(3) F or compensation purposes, the fair value of options on the dale of grant is determined applying the Black-Scholes
option valuation model using Mercer's assumptio ns, since this meth od is applied consistently in Mercer's c ompetitive
market analysis. This differs from our accounting fair value due to differences in the underlying assumptions as
summarized in the following table:

REQUIRED:

Explain why detailed compensation disclosure, including the CD&A, of the top leaders of a
publically-accountable entity is important to shareholders and other stakeholders of the accounting
entity.

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RSM 320 FALL 2018

QUESTION 3A [9 MARKS]

FROM PAGE 2 OF THOMSON REUTERS 2017 ANNUAL REPORT:

Overview
Thomson Reuters is the world's leading source of news and infonnation for professional markets. Our customers rely
on us to deliver the intelligence, technology and expertise U1ey need to find trusted answers. The business has operated
in more than LOO countries for more than I 00 years. We are a Canadian company with shares listed on the Toronto
Stock Exchange and New York Stock Exchange (symbol: TRI). Our website is www.fuomsonreuters.com.

In 2017, we were organized in three business units supported by a corporate center:

Financial & Risk

A leading provider of critical news, information and analytics, enabling transactions and connecting communities of
trading, investment, financial and corporate professionals. Financial & Risk also provides leading regulatory and
operational risk management solutions. We recently signed an agreement to enter into a strategic partnership and sell
a 55% interest in this business..

Legal
A leading provider of critical online and print information, decision fools, soil ware and services that support legal,
investigation, business and government professionals around the world. ·

Tax & Accounting

A leading provider of integrated tax compliance and accounting information, software and services for professionals
in accounting firms, corporations, law fim1s and government.

We also operate:
-Reuters, a leading provider of real-time, high-impact, multimedia news and information services to newspapers,
television and cable networks, radio stations and websites around the globe.
- A Global Growth Organization (GGO) that ;vorks across our business units to combine our global capabilities and
expand our local presence and development in countries and regions where we believe the greatest growth
opportunities exist. GGO supports our businesses in Latin America, China, India, the Middle East, Africa, the
Association of Southeast Asian Nations,
North Asia, Russia and countries comprising the Commonwealth oflndependent States, and Turkey.
-An Enterprise Technology & Operations (ET &O) group which drives the transformation of our company into a more
integrated enterprise by unifying infrastructure across our organization, including technology platforms, data centers,
real estate, products and services.

The company disclosed the following in its MD&A:

RSM 320H1 F - Final Exam Page 7 of 21

RSM 320 FALL 2018

Use of Non-IFRS Financial Measures

We use non-IFRS measures as supplemental indicators of ou r operating performance and financial position as well as for Internal
planning purposes. We believe non-IFRS financial measures provide more insight into our performance. Non-lrRS measures do
not have standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to the calculation of similar
measures used by other companies, and should not be viewed as alternatives to measures of financial performance calculated in
accordance with IFRS.
Our non- IFRS financial measures include:

• Adjusted EBITDA and the relat ed margin;

• Adjusted EBITIJA less capital expenditures and t he related margin;
• Adjusted earnings and adjusted earnings per share (EPS);
• Net debt;
• Free cash flow; and
• Return on invested capital (ROIC}.
We also report changes in our revenues, operating expenses. adjusted EBITDA, the related margin and adjusted CPS before the
Impact of foreign currency or at "constant currency". These measures remove the impacts from changes in foreign currency
exchange rates In order to provide bet ter comparability of our business trends from period to period.

As an example of the company's definition of a non_IFRS disclosure, the company published the
following in its MD&A:

Segment adjusted EBITDA represents eamfngs from
continuing operations before tax expense or benefit
net interest e•pense. other finance costs or Income.
depreciation, amortization of software and other
ldent1fiabte Intangible assets. our share of post-tax
ea1 n\n95 or losses In equity method investments.
other operating gains and losses. certain asset
Impairment charges. fair value adiU!>tments and
corporate related Items.
Provides a consistent basis to evaluate Earnings from continuing operations
operating profltabllity and performance trends
by excluding Items that we do not consider to
be controllable actMtles for this purpose.
Represents a measu1e commonly 1eported and
widely used 17)! lnves101s as a valua tion metric.
Additionally, this measure Is used to assess our
ability to Incur and service debt.

Consolidated adjusted EBIIDA is comprised of

segment adjusted EBITDA from each reportable
segment and Corporate & Other.

The related margins are expressed as a percentage

of revenues.

REQUIRED:

Explain why a company such as Thomson Reuters would want to report non-IFRS measures m
addition to its audited financial statements. Is it fair to do so?

QUESTION 4A (9 MARK.SJ

The IFRS approach to accounting for stock options requires professional judgment. Critically
evaluate the IFRS approach to accounting for stock options. Is the U.S. GAAP approach better?
Explain.

RSM 320H1 F - Final Exam Page 8 of 21

 RSM 320 FALL 2018

QUESTION SA (9 MARKS]

Teck writes the following on the inside cover of its 2017 Sustainability Repo1t:

About This Report

Teck's 2017 Sustainability Report marks our 17th year of annual reporting on the economic, social and environmental
topics that are most material to our stakeholders and to our business. Avai lable in English and Spanish, our report is
in Core accordance with the Global Reporting Initiative (GRI) Standards and G4 Mining and Metals Sector
Disclosures, and is aligned with the principles of integrated reporting. Our 20 l 7 Annual Report provides further detail
on our financial and operational performance.

This report contains a comprehensive overview of our sustainability strategy, including a summary of progress towards
achieving our short-term goals to 2020 in the areas of Community, Water, Our People, Biodiversity, Energy and
Climate Change, and Air. This report also describes how sustainability is integrated into identifying and managing
risks and opportunities in the course of our business activities. Written for a range of audiences, fro m investors to
industry peers to residents near our operations, this report is focused on providing balanced and relevant information.

This report has been reviewed and approved by Teck's senior management team and Board of Directors.

Assurance

PricewaterhouseCoopers LLP independently reviewed our application of the GRI Standards and the alignment of our
practices with the International Council on Mining and Metals (ICMM) 10 Principles, guided by the ICMM Assurance
Procedure. See pages 99- 101 for their assurance letter. PricewatcrhouseCoopers LLP is also Teck's independent
auditor.

REQUIRED:

In your supported opinion, how credible is Tcck's 20 17 Sustainability Report?

RSM 320H1 F - Final Exam Page 9 of 21

"- ~------ -
RSM 320 FALL 20 18

PART B OF THE EXAMINATION: TWO COMPULSORY TECHNICAL

QUESTIONS
A TOTAL OF 25 MARKS ARE AVAILABLE IN THIS PART OF THE EXAMINATION

QUESTION lB [10 MARKS)

The following information was disclosed during the audit of ABC Inc.:
~ Amount Due per Tax Return
2017 $105,000
2018 $84,000

On January l , 2017, equipment was purchased for $400,000. For financial reporting purposes,
the company uses straight-line depreciation over a five-year life, with no residual value. For tax
purposes, the CCA rate is 25%.

In January 2018, $225,000 was collected in advance for the rental of a building for the next three
years. The entire $225,000 is reported as taxable income in 2018, but $150,000 of the $225,000 is
reported as unearned revenue on the December 31, 2018 statement of financial position. The
$150,000 of unearned revenue will be eamed equally in 2019 and 2020.

The tax rate is 30% in 2017 and all subsequent periods.

No temporary differences existed at the end of 2016. ABC Inc. expects to report taxable income
in each of the next five years. Its fiscal year ends December 31,

ABC Inc. follows TFRS.

Required:
(a) Determine the balance of the Deferred Tax Asset or Deferred Tax Liability account at
December 31, 2017, and indicate the account's classification on the statement of financial position.
(2 marks)

(b) Prepare the journal entries to record income taxes for 2017. (2 marks}

(c) Determine the balance of the Deferred Tax Asset or Deferred Tax Liability account at
December 31, 2018, and indicate the account's classification on the December 31, 2018. (2 marks)

(d) Prepare the journal entry(ies) to record income taxes for 2018. (2 marks)

(e) Is it possible to have more than two accounts for deferred taxes reported on a statement of
financial position? Explain. (2 marks)

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RSM 320 FALL 201 8

QUESTION 2B (15 MARKS]

ABC Inc. provides the following infonnation related to its post-retirement health care benefits for
the year 2017:

Defined post-retirement benefit obligation at January 1, 2017 $ 110,000

Plan assets, January l, 2017 42,000
Actual return on plan assets, 2017 3,000
Discount rate 10%
Service cost, 2017 57,000
Plan funding during 2017 22,000
Payments from plan to retirees during 2017 6,000
Actuarial loss on defined post-retirement benefit obligation,
2017 (end of year) 31 ,000

ABC Inc. follows IFRS.

Required:
(a) Calculate the post-retirement benefit expense for 2017. (2 marks)

(b) Calculate the post-retirement benefit remeasurement gain or loss- other comprehensive income
(OCI) for 2017. (2 marks)

(c) Determine the December 31 , 2017 balance of the plan assets, the defined post-retirement
benefit obligation, and the plan surplus or deficit. (7 marks)

(d) Determine the balance of the net post-retirement benefit liability/asset account on the
December 31, 2017 statement of financial position. (2 marks)

(e) Reconcile the plan surplus or deficit with the amount reported on the statement of financial
position at December 31 , 2017. (2 marks)

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RSM 320 FALL 2018

PART C OF THE EXAMINATION: DO ONLY ONE OF THE AVAILABLE

TWO QUESTIONS
A TOTAL OF 30 MARKS ARE AVAILABLE IN TIDS PART OF THE
EXAMINATION

I QUESTION lC (30 MARKS)

Imagine that you are a professional accountant employed by Teck Resources Limited. Your boss,
the company's CFO, has assigned the following to you:

The Board of Directors of the company is meeti11g to discuss the company's financial reporting
and reporting generally. New members of the Board have requested that we assist them by
preparing a memo that addresses the following issues:

-What are the various components of financial reporting and reporting generally (for example,
the audited financial statements, the MD&A, the CEO letter, etc.), and why is each of these
components important?

-Are different stakeholders in the company better served by different components of our
reporting? How?

-The Table of Contents of our Management Proxy Circular dated March 6, 2018, includes the
following:

Compen sation Discussion and Aneslyst!S. .... .. .. . .... . . .......... .. .. .. .. . .. ... .. ... . . . ................ . .................... . .......... . ..... 45
Compensation Overview ...................................... ............... . .................... .. ... .. .... . .. .. ......... . .... .. . . .. . . ... . . ........ 56
Objectives of the Executlve Compe n sation Program ....... .. . . . ...... . . ... . . .......... .. ..... ....... ... .... . .. .. ........ . . ..... 56
Compe nsa tio n Comp.. rator Group . ....... ........ ................................ .......... .. . . ... ....... .................... . ....... .... . 56
Tota l Direct Compensati o n Compone nts . .. .. .. ..... . .. . ......... . ......... . ... .................... .... . ................ . ......... ..... 57
P ensions, Benefits and Perquisites .. . ........... .. ... . . . ... .. .... ... ........ ...... ........ . ....... ......... .. ............................ 60
D e te rmin i ng Compe n s.,tlon Mlx ........................ ........................... .. ........ . ......... ........ .... .. . ..... .. . .... .... .. ..... 6 1
Setti ng Perf'orn,ance Objectives a nd Goal s ......... . .... .... . .. .... .... . . . . ....... . ... . . ... . ...... .. .. 4 • •••• 0 ••••••••• • • • •• •••••• ••• • 6 1
Reviewing Performance e nd Setting Compensetlon .................... ... ... ..... ... .............................. .. . .......... 6 1
Compensation Risk .. . ....... . ...... .......................... ................ .............. . ... .... .. ... ..... ........... .. .. ... ... . . . ............. 62
Compensati o n .. C l ewback .. Pollcy .... . ...... ..... .... ........... . . . . ............. . . . . . . . . .. . ... ... . .. .. . .... . .. ..... .............. . ...... . . 63
Anti-Hedging Pollcy ....... ... ...... .......... .............. ....... ....... .. .. ........... . . . .... ....... . . . ................. ............ .... ......... 63
A n a lysis of Total Direct Compe n sati o n and 201 7 Re s ults ....... .... .... . .. .. ... ...... . . ............. .. . ......................... . 63
Base Sal ary . . ... . . . ... . . ... . ... .. ............... . ...... .. ... . ....... .. .. . ...................... . ................ . ................. .. . ................. . 63
Annual Incentive P r ogram ......... . ..... .... ...... . .................. . .. . ... .. .... . ............ .. ................... . . .. . ..... · · ·- · ······ ...... 63
lndividl.1al Perf<>rtn&tlce ................................. . ........ . ..... . ... . .. .. . ........ .. ...... .. . ..... . ....... .. .... . ... . ...... . ... . ....... 66
2017 Results - CEO Annua l Incentive Bonus .... ....... ........ .. .. ......... ... ... . .. .. .. .. .............. ..... ... .. .. ... .. . ........ 69
Long-Term Incentiv es -········· ·· ·· · - ·····- - ·· ···· · ·-·· · ·· · ····-· · ··· · -· · ··· · · ·········· · -···· · ····· · ·· · · ·· · ·· ·· · •· ·· · ·· · ··· · · ······· · ········· ·-69
S l-iare Ownership Gu idelines .... .. ........... . .. .. ............................... . ........... .. ... ..................... , .......... . .... ...... 72
Summary o f T otal Con-.pensatlon for NE Os ....... . .. ....... ... ............. . ....... .. ....... .. ........ ............... ... ............ 74
Realizable Pe.y · ·-· · ·· ··· ·· ·····-·· ·········· · ····· ··· ·· ·· -····· ·· ·· ···- ········-·········· ······ ·- ·· · ······ ·· ··· ·· · ·· ············-··· ·· · ······ .. · ··· · 75
P e rfo rm ance Graph ...... . ......................... . .......... . .... . ....... . ................... . . . . ... ........ .. . ............ . .................. . 76
Incentive P l an Aw<'lrds ................. . ... ............ .. ...... ... ....... .. ... .. ............ .. ........................................... ... .. ........ 8 0
o utstanding Share-Based Awards and Option-Based Awards ........... . ..... ............... ....... ... ... ... .... . ........ 80
Incentive P l an A w ards - Value Vested. E arned or Realized During tl'e Year ........... . ........ . .. .......... . .... 81
S tock Opt ion s Exercised ............. .. .. ........... .......... ...... .... ...... ......... ....... .... ................ .............. ..... . .......... 82
P e nsions ................................. ....... ........ . .... . .. ....... ..... ..... ..... .. .... .. ..... ..... .......................................... . .... ...... . 83
Defined Benefit Pension . .. .. .. ...... ........ . . ...... .. .. .......... . ................ ............................... . .. .... . ..... ... ..... ........ 83
D e fined Contribu tion Pension ....... .. ..... ...... . ................................. ....................... . .............. .......... . ......... 84
Tern,ination and C h ange In Contro l Benefits .............. . ....... .. ... ....... . .............. . ........................................... 84

RSM 320H1 F - Final Exam Page12of21

RSM 320 FALL 2018

Why are we required to disclose such apparently sensitive infonnation? Who benefits from such
disclosure, and what are the costs?

-Some of the information that we report in the various components of financial reporting and
reporting generally, are audited, but most are not. The financial statements that we report
annually are audited and must adhere to International Financial Reporting Standards, so they are
accurate and true, and objective. This is important in areas such as employee future benefits and
income tax. Is this not so?

- Our company received CPA Canada's Award of Excellence in Sustainability Reporting. That's
nice, but how is sustainability reporting important to our shareholders?

REQUIRED:

Prepare a draft of the memo for review by your boss.

IQUESTION 2C (30 marks)

The Canadian Broadcasting Corporation, known popularly as CBC for its English language
service and as Radio-Canada for its French language service, is a Canadian federal Crown
corporation that serves as the national public broadcaster for both radio and television.

REQUIRED:

Note 17 ("Pension Plans and Employee-Related Liabilities") from CBC's recent audited
financial statements is shown below.

(a) Identify, with support, five important items of information revealed in the note. Explain why
a reader of the CBC's financial statements would find the information item important. (10
marks)

(b) Assess the quality of the note. (20 marks)

RSM 320H1 F - Final Exam Page 13 of 21

RSM 320 FALL 2018

. 17. PENSION PLANS AND EMPLOYEE-RELATED LIABILITIES

The Corporation provides pension and loog-te.rm serviceretirementbenefitsbasedon thefength ofservicl'and final average
eamini;;s of rts employees, and other defined benefit post-employment ber'l!!fit plans to its employees such as post-employment
lite insu:ra:nce.
PENSION PLANS AND OTHER POST-EMPLOYMENT BENEFITS(OPE6)
ACCOUNTING POUCIE5 CRJTICA.LACCOUHTING
ESTIMATES ANO JU:OGJi,llENTS
Ac~ounting for defined benefit
poem ion plans and other post-
The cost ot the defined benefit retirement plans are determined on an ad\Jariaf basis using
employment beflefits (OPEB)
the proiected unit credit method and management's best assumptions (such as the rate of reqllires that a>ssumptions be
compensation. inffation. retirement ages of employees and mortality of member.;), with
made to help value benefit
actuarial valuations being carried out at the end of each annual reportirlg period.
obligations and pension assets.
The components of defined bale:fit costs are categorized as follows:
The primary assumptions and
• Seryjce cw - includes current service cost and past servlceoost.. The Coq:ioration estimates irdude the d•scount
recognizes it as part of net results far the period Past service costs, generally rates, health care cost trend
resulting from changes in the benefits payable for past services under an existing rates:. long-term rate of
plan. Me recogrized in the Consolidated Statement of Income (loss) in the period compensation increase, fub..lre
of a plan amendment. pensioo increases and mortality
of members.. These assumptions
• Ngt jnterchxpense gr inrome- The.Corporatioo recognizes it: ;rs part of O!!t are of a loog-tenn nahlre, which
results for the pericd. Net interest is calctilated by applying the discount rate at is consistent with the nature of
the begjrmingofthe periodtothenetdemed benefitliabihtyor asset post~ploymetlt benefits.

Thl!'Se two compo11ents.. in aggregate, are allocated be.tweoen the various functions on theo The Corporation uses the Fiera
Consolidated Statement of Income.. capital curve (CIA curve1 to
• Re!Wa'iuremmt:;.-comprises actuarial gains and losses and the return on pl.m determine the discount rate: for
assets 'exduding im~esi:). lhe-'..e Me reflected immediately ·in the C.on.solidatlMI cakwMmgthedelinedbeneffl
statement of Financial Posrtionwith a d'larp or credit cecogniz.ed in other obHsation. Ou ring the year, the
colllpf'ehensive income (kiss) in ttie period in v.tlich th@y ocrur. Remeastmments Cocparation ceasacf rounding its
recognized in oYheJ" comprehensive income are neversubsequentlyrecfa:ssified txJ discoont rate txJ the nearest 25
net results. lbe Corporation transfers 311 remeasi.reml!flt:s directly from other basispoint(bp). Managementf\as
comprehenswe income to rlrtained eaming5 as a poltcy choice. elec'b!d to use the actual discount
ratl! in order to increase the
The liability recognized in the Consolidated Stah!fnent of F1nancial Position in respect of accuracy of amounts recorded in
defined benefit pension plans is the presEnt valueoftbeclefinedbenefitobligationatthe the financial statements.
end of the reporting period less the fair value of plan assets. The defined benefit obligation
is cafrulated annually bv independent actuaries usifllthe proiected unit credit method. The Char\ges txJ these primary
present value of ttie defined benefit obligation is determined by discounting the estimated assumptions and estinutes
future cash outflows using interest rate deterTIWned by reference to marlcet yields at the would impact amounts
end otthereportingperiod on high quality Canadqncorporate bonds thathavetenns to recognized in net results .ond
maturity approximating the. terms of the related defined benefit obligation. amounts recognized in Other
Comprehensive Income. as
When the actuarial cafcul.i;ticn res~ in a benefit a.1set to the Corpcratiol\,the recognized applicable. A sensitivity analysis
asset is limited to the present valueofeconomic benefits available in the farm of any future of these changes in primary
refunds from \:he p1an or reductions in Mure contributions to the plan. In order to calallate assumptions is disclosed in Note
ttie prese.ot value of economic benefih;. consideration is given to any mlnilTAlm funding 178.
reqllirements that apply to any plan of the Corporation. All economic benefit is available if
it is realizableduringthellfeaf theplan, cw onsertlementoftheplan ~abilities.

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RSM 320 FALL 201 8

OPEB AND EMPLOYEE BENEFITS OTHER THAN POST-EMPLOYMENT BENEFITS

ACCOUtmNG POLICIES CRITICAL ACCOUNTING ESTIMATES

AND JUDGMENTS
There are AO cntlcal accounting
estimates and Judgment<> related to
Other pos-t-employment be-n.:fits (OPES) liabi lrties are recognized as foltows.
employee bene<fits other than tho-se-
• For long-term disability and workers' compensation \vhen the eW!nt that relating to the pnmary actuarial
abhgatesthe Corporation occurs: assumptions discussed previous ty.
• For oontin\Jation ot b~fit co...wagt! for employees on long-term disab.I ity
,and the non-contnf>uto.ry long-term benefit plan. the provtsion is determined
on an actu.arial basis using discount rates and assumptions consisb?nt wrth
those~ for post-employment benefits and the relatedexp.erise is
recoSJliz.ed over the penod the em ployees rellda- the services Actuarial gams
(lassies) and past service costs are-recognized 1mmecliately in t tw! Consoli.dated
Statement of Income (Loss) in the period they occur.

Employee benefits odier than post-€!Jlployment benefits

The- Coq>Of'abon recognizes the expense relating to sllort-tenn bmefits mcluding
short-term compensated absences as follows;

• Forsalanes.sacial securitycontnbut1on. bonuses and vacations in the period

the employees render tile services.
• For employee health. d ent.al and life insurance plans m the period the
expenses are incurred: and!
• For short-tenn non-accumulating compensated absence-s such as sick le3Ye..
pa.-ental leav~ short-term disabtlrty and woders' compensatJon in me period
the absence occurs.
Short-term employee benefits are expensed as the re4ated service 1s pt"O'llded A
liabirity is recognized for dle amount expected to be paid 1t t he Corporation has a
present legal or construc:bve obligation to pay t his amount as a result of past service
provided by the employee and the obligation can be estimated reliably

TERMINATION BENEFITS
ACCOUNTING PoUCIES CRJTICAl.ACOOUNTING EsTIMA TES
ANO JUDGMENTS
The Corporation recognizes terminatK>n benefits at the earlier of the following dates:- There ar e AO cntlcal accounting
(a} when the Corporatiori can no lo~ withdraw the offer of !hose benefits; and (b) estimates and judgments related to
when the Corporation recognizes costs foc a restnJcruring that is w1th1n the scope ot termination benefits
IAS 37 and involve-s the payment of tenn1nat1on benefits
In the case at a voluntary depart\lre.. the Corporation can no longer withdraw an offur
of termination benefits When e ittief" the employee accepts tile offer. orvmen a
restriction on the Corporation's ability to withdraw the offe-r exists In the case of an
involuntary departure. the Corpocation can no longer wrttidraw an offer of te-nnination
benefits vmen it has communicated to the affected emplay·ees a plan or tennmaticn

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RSM 320 FALL 2018

Supporting Information
A PENSION PLAN ASSET/LlABILllY AND EMPLOYEE-RB.ATED ltABtUTIES
Employee-related assets/liabilities recognized and pr-esented in the Consolidated Statementof Fil\OllCial Position are as follows:

Pcmianpbn .;iud l02.02S 261,?21

Pcm ion p~n l~bitt)o 117.520 lCS,095
Clb::r "°"k:m.,Ja,mc nt i;bns 117;814 112.m
Vx•lion P•Y 60,090 57,96'.l
rcrrnmlXm bcndih 7,527 9.fin
S.;ol•~blcd lfahiWcs 61,510 SS,735 29.844 23,2112
foblpensioo pbns ~nd emplo~bNI li::ibi~s 129,ltJ 123,397 264.1711 264,,149

The amount included in the Consolidated Statement of Financial Position arisi~from the Corporation's obligation in respect of its
defined benefit plans is as follows:

Funded lklluMi::.d Other "°"1-

pcmicn pcnK>n ~bymont
pbn iDM plans

F •ir v.ob:! of pbn ;isscls 7.071,99& 6.73l32S

!kmcd bC'ndit ob!ipiion 6.769,973 117.520 117.1114 447U04 122.772
Nehs•rt{iabi.litr) :uis ini: ln:>m defined
benefit ob~;ation 11t7,.52q 1w.a1CJ 261.n1 (lilEl.Cl95! Ul2.7721

The Corporation maintains a contributory defined benefit pens:ion pt.an and non-<ontriootory long-t«m benefit plans as, defined
below:
Cpntribytwy defined !;)l?pgfit oension Wan
The Canadian Br-oadc:astingCarporation Pension Plan covers SAJbstantially all employees of the Corpor-ation. The Plan is
administered by the CBC Pen!>ian Board ofTrustees. including the management of the Plan's assets and the payment of benefits
promised to Pfan members and their survivors. The Plan is federally~ated and is governed by the provisions of the Pension
Benetits standants Act (the Act), and other applable regulations_
Retirement benefits are based on the length of pensionable service and on the average of the best five consecutive years of
pensionable salary in the last 10'yeats of employml!flt Employees are required to contribube a percentage of their pensionable
5JlarytD tile Plan, with the Carporationpl'ovidingthebalanceofthefundirYg.as required, based on actuarial valuations. The
amounts ioduded in these consolidated financial staTI!ments n!tlect thelatestfinfing valuationwhichwas pemxmedas of
Decembet" 31.. 2017. While this valuation has been completed, it has not yet been filed with the pension authorities.
Themeasurementdate for the pension plan assets and the defined benefit obligation is March 31, 2018.
The risks associated with the COfllOl"ation's defined benefit plan areas follows·

F-undingrisk: Oneofthepnnaryriskstfut plansponsars face ls funding risk, which ls the risk that themrestmentasset
growth and conbiootion rat.e s of the Corporation's pension plan will not be sufficient to cover t:fle pension obligations,
r~lbng in unfunded Iiabilities.. When a. funding deficit exists, regulatory authorities r-equirethat special payments be
made aver specified future periods.
The major contributors to funding risk are tile dedines in discol.Slt rates and investments tailing to achieve expected
returns. In addition. thepeosionobllgatlonsareaffected byno~onomic factors like changes 111 memberdemograiphia.
Funding risk ismal\iigedbymonrtoringand reviewing the funded ratio on an ongoing ba:sisand ensuring th.at investment
d~ions are made in accordance with established inYestmeot policies: and procedures and applicable l~slation. The
statement of Investment Policies and Procedtres (SIPP) is reviewed illlnually by the CBC Pension Board ofTrustees with
a view to pt"ovide the pertSion plans with long-tenn rate of .-etum sufficient to assist the plans in meeting funding
objectives and the oogoinggrowthof pension obligati.o ns.

Other risks: The plan assets are also subject to a varie-ty of financial risks asa res'lllt of investment activiti5. These risks
include credit risk, maricet risk (interest rate, c1STency risk and price risk) and liquidity ristL In addition, ttie defil'M!d
93

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RSM 320 FALL 2018

benefit obi 1gation and costs are subject to measurement uncertainty due to the- use of actuarial assu£n?tions {see below~.
The impxt of tflese factors oo the reme-astrement of the pension beo&it ass.&. .:;.nd pension, otfle,r post-employment and
other long-term beoefitli.ab1lities can be significant and volatile at tim~
Unfundgd oon<orrtnOOtgrydefined b@eftt oeosjgn pl3Jl
The Corporation also mainta:ns unfunded non-contributory d~firal benefit pension arrangements. AH pl3tls ore subJe<t to an
annual actuarial valuation.
Non=coptcibutgcy Jgng-fpcm Rgmfit plgtps

The Corporation provides the following long-term employee !J,e,nefits to its employees
A non-<.ontributory ·l oog-term benefit pl.an for certain employees hired prior to the vari<lus plan closure dates which vary
by ca~ ofemployees between April l.. 2005 and Octt>bff 1, 2007 Unda- the plan. employees retiring with more
than three years of service with the Corporation can choose to receive a ca=h award upon retirement or rmpl"ove tnf!ir
pEf'ISion benefits. The benefits are based on the length of pensiorw1ble service and on the s.a.Jary rate at March 2005, July
2005 or at retirement/death. c!.ependingon the category of employees.
othef employee ruttire benefits such as long-term disability a.nd workers' compensation, continuatJOn ol benefits
cove.-age for employees on long-term d1Sabil1ty and post-n!tirement life insurance.
The last actuarial valuations fur the non<ootributory long-tenn benefit plan and the contil1l.lation of betietits coverage plan were
made as at Decembe< 31, 2015

B. SrGNJACANT AcruAR!ALASSUMPTIONS
In 2-017-2018, the Corporation dlanged its methodology for estimating the discount rate Beginning in the second quarter of
2017-2018. tfle COfJ>Oration no longer rounds its discount rate to the nearest 2 5 basis pomt (bp), in order to increase the accuracy
of amounts recorded in the financial stlh!ment:s.

Compared to a discount rate of 3.50'Xi thiltwould have been u~under the previous methodOlogy, this change in estimate to an
actu.od discount rate of 3.53'6 resulted in an increase m the<Ktuarial gain of $31. 5 million for the year, recorded as a
remeasurement in other comprehensive income. with an offsetting decrease 111 too Corporation~ non-current pensioo plans and
emp4oyee refated liabilities..
The siSJlific.ant. actuarial assvmptions used for the purpCl"...es of detennirnngthe defined benefit obligation and pension benefit
costs were

AsHm1nions for lhec ~lcul>lion of ~nsion bene fitco• ts :

Oiscaunlnb: 3.7S" 3.7S"

AHumptions. for llhe ulcubiW>nof "'"benefit oblii:•1i<in:

Discount r.ol<> • pension 3.53% 3. 7S"
l>iKiotlnl nl<> - loni: s<:Mc i:;nluity 3.24" 3.001'
Discount rate • l f 0 bcnclil 3.24% 3.00)!
DiKount r.ob: • lilo iruur.1ncc 3.4~ 3.Slni
CBC Pcnsiancrmorblily Cl!C Pc.miancrmotl21itv
bblc: b:>scd an CllC bblc: bucd.,., Cl!C
c:q:icricnc" ...;111 CPM experience: \\iiidi CPM
flnJicdian solc: 9 projection sale: I!

lonc:·b:rm ntr ol c.ompcnu.lian incrc:isc. cxclud'."'IV; m<:rit •nd proooliot1 1.40% in 20U& 2019 t.~ in 2017 & 2019
2.7S" lflcn:~fft:r 1.H'N> 6ic.rultcr

6.'IO'X in 20tlldcdnirq; 7 :z<n: in 2017 decfni111:

lb 4.5()'.l cm=.r 10 ye_.,,. I:> 4.501' o""" 10 yc~rs

1.861' 1.861'

94

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RSM 320 FALL 2018

C. SENSITIVl1Y ANALYSIS
The sensitivity analysis o f the s igmficant actuarial assumptions 1N01Jld show the fullowingcharlges in the prasent value of the
ck!fined benefit obligations:
Pcn<ion pbn•
• ..
Ois=unt n« ..,...itivity
100 t .:is;. Points hi:;hcr -l:JA" -Ja.2" -7~ ·1.8%
100 ~poinb law<Y 17.3% 17~ S..6X. 9.l"-

E:xpectiod rate ol fum"' sal;wy n:r.,__.

100 b.zio;paint3 ~· 2.6" 2.~ ~ 6.6"
100 bz,io; poinls lowc::r -2 .~ -U'lri -5.6X. -5.a!(,

EllP<Cted rate oA fumre peruoon inauses

100 1>.z;. poirrt.s hi;:hcr
100 bz.is pol11!3 Iowa
14.tX.
-11.SX.
13..6"
· U-ZC
o.s"
-0.4"
OA"
·DA"
Mort:il1ey semivity
Pcn::ioocrs WI: XI cxtn Y<'¥ 32'(. 4.11% -15" ·1.6"
Pcn>iancrs die;, '\'ca' before -33" -4.9\\1 t.?X. 1.B%
He>ltb ar10 ant trend nt<:s sensitivity
100 b.zis poin1s hir;hcr NIA NIA 1-7" 1.2'5
100 b;asio;poi1.ts lmNu NIA NIA -l.4" ·1.0"
KJ A· not -.bl::

The sensitivity analysis sresented abG-re may not be reP"esentafure of the actual changein the defined benefit obligation as it is
unlike ly that the change in assumpti()l'l.';WOUld occur 1n isolation of one another as some of the assumptiCJOS may becorrelatecL
When calculilting the sensitivity of the defined benefit obligiltion to significant actuarial asstmptions. the same method (pr-esent
value of tile defined benefit oblig;rtion calculilted with the projected unit credit method at the end of the reporting period) has
been applied as when calculating the pE!ll.slon liability recxl8Jlized within the Consolidated Statement of Fmancial Position..
Rlr the contributory defined benefit pension plan. an asseUliabllity study is perfurmed periodically to review the risk/reward
associated with the existing long-term as.set.mix policy, analyze the risk/rew.rd profile that wouldresU'lt from alternative as5et
mix policies. and consider the impact of various economic environments on both the assets and liabilities (pension obligations).
1lle mast recef'lt asset/liabllitystudywas completed in 2017. Its main findings were:

• Mamtafn the value of the Plan's Liability Driven Investment (LDl}«t strategy that focuses on redudng the interest rate
and inflation risk mismatch between the Plan's assets and liabilities;
Introduce a structure to systematically adjust the Plan's interast ratehedgingratioba.ledontheaevelof interest rates;
• Maintain at e xisting levels the amount of return 81!flerating assets with higher return potential, sucti as equities.private
investments and real estate and;

• Introduce a quantified risk tolerance for the Plan.

The Plan is ft.mdecf on the basis of actuarial valuations, vmich ace made on an annual basis.. Emplavees are required to contribute a
percentage of their pensionable s.alary. The Corporation provides the balance of the funding, as r@Quired. based on actuarial
valuations.

D. CONTRIBUTION RATE
The contn"bution rate for full-time employees is as fmtows:

Hirt::•mir•i:s ap to the m::Wmurn public~ llbne~

1

April 110 June lO 7.6lnl

July 1 to M:irc:h 31 S.l'""
For .tnc:rementi.1 ~iQcs in e.x.cem. of the m.a:ir.num ~ pension pbn e.2minp 1
April 1 to kine 30 9.191'
July 1 to M:ord> l1 10.10'X.
1
Thc m:xim:Jmpub6c """""'" ~ "' 2018 8 155,9000017: $.5.5,'.I0(\ 2016: $54.\lroi

el.l)'lllt:.-lrn-.:!lll:.ac.11l••cr--~~._fDll'Clb--"'_..n:&dtcWt•'--1ll1~UrffttuC ID ....,wpciralml~ 'fOC.atft!'f_,Uti*t~ ....... ..,.,..adiac:ptJU,...Hw~..,...

ia"1 . . . .d'.'Qt,,...h.Mddnl.-ta.1'9cA~4h.wic~Ull'ls lnb:tol.ta_,.'"'°'~¥.fltb.'11UaM thc-pm w;opt_.\bbtl'tft.~ -.c11.~..,.olft.crrulttc.nwa:bu:1nQJ•N1t tuwric h
·urm eds.ft-..t.ukMd~ wn dUw«&aadl't,.,...i.n d•._ 16*Wt-a

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RSM 320 FALL 20 18

E. TOTAL CASH PAYMENTS

Cash payments for pension, other post-employment and other long-term ~nefits for the Corporation were as fol!C>Ws:
For U1C: l '<¥ ended M=h 31

Bcno:fib p;oid direct.Ir lo bc~ics t2,492 1l.9ll

Employ"! n;r;ul>r conirillt1tions to pgision bcnc:fit pl>m S l ,B24 Sl.494
Tobi ash o;oymenls far ddiru:d '""'"'fit pt..,,. 66,306 67,425

f. MATURITY PROFILE
The maturity profile of the bellefit plan ob~iµtion and other post-employment bellefits for tf'le Corporation IS as; foltov.<s.
Otha past-employment p bns

Avcr.iC>C chr.itian al the bondit oblii:;ltiaot 15.2 '/C.ln ts.o vcar• B.1 ye..,; aJ.,.,.,..
Active members 22.0 vc;xs 2l.S vc;>r• 8.1 ye..,; B.9~
Ocfarod members 20.6 yc;w~ \B.3 '1'C:>n NIA NIA
Retired mcmlx:n t0.9 Y<!"" 10.S """'"' 7.9yC;ld'S 7.9 '(<:"1'$
NIA · not~alilc

TheCorpo.-ationexpectstom.ake a contribution of $51.'lmillioo to the defined benefitpensioo plans during the neltt financial
year. starting in J\Jly 2017, theCorporation moved to a !>0:50current seiVice oost-sharingbetween employl!eS and employ!!f" for
pension alfrtrjbutions for all members.

G~ DEANED BENEFITOBUGATION
Movements 111 the present value of the defined benefit obligation were as fellows:

Of>crpo.s:t- Othcr -1-

Pcnoim ani:*>l'!•Clll Pcrr.r.x. ciq:ilovmor&
piano; p1;i,.. lions pbns

Q:icninc ddin<:d bcncft obriptian 6,.579,699 132,712 6.,413,660 t:l6,B33

Cum:nt.c:,,,;a, cast t06.2l0 S.SD 105,569 5\525
Jnbatc.ost 244,017 4,124 237,604 .S.301
C~fiD<n"""'*"""'s 57.271! 46.447
R.,...,,.."'"11K<*:
Aciuori;il bsscs (l:>.fti) .lirisirc flam dances in dcmocr.aP>ic is•uirciticns (73.S1Q U0.566t 104,472 Clll7)
Adi.t;arQI bs~ (l:a..) nine liom danccr. ilt fin.oncial ""'um~ 211.m [2.592) [24.:21'.lCt 71
Adu;ari;ol ...,..,. (l:nJ wine: fmm ~nee ;aiij.io1nrns 52,016 t.OlS (10.36'.ll 394
Bcnclils paid (296,0!J (12,d!!!!) (293,49!!! \U931l
659971.tn t17,St4 6,519£ 132,m
1-t FAIRVALUEOFPLANASSETS
'Movements in the fair value otthe plan assets were as fol lows:
Othapo:it-
Pc:Mion °""1oymc,.
pl:ni; pbns

OpcDni: f:iir v•luc of.,....,

:rects 6,T.tl,l25 6.450.327
k!mimtr21:ion fees !other ti.....~ .....
~tfcs:s) [6.600}. ~Aro!
lntC11"51 inoa>mc: on pbn """'"' 241'1..727 2311,195
~tumao •pbn •i:sc:ts. O".cludi'1:; inf.cn:sl in<Dmc: 2111.474 ns,a.u
Uintribution> from""""°""'°" 57.279 46A47
Contributions &om the Corpor;riion 53,924 12.482 Sl.494 13,931
BadCs;p>il t296mot (1 2,4112) C293ACX1/ (13,9311
Clasi'1: birvaloe al .,,,., >Zets 7.071,998 6,Jll,325

96

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RSM 320 FALL 2018

•lfr AHNIM.-CllJ ~V'2>01cl

The tair value of the p~n assas can be allocated to the following categories:
Not quoted Notquot2d
Quoted market market price mait.et price
man active in mactive
mill'bt market
tlellel 2} Jel 3)

80761 300435
2 .0 03,166 874.276 2,877,442

11246 13,24&
411JJ03 395,253 806,256
1.427,860 259395 l,687.255

~ Property 36.988 567.463 604.451

i' Private investm?nts 669,846 669,846
iii Hedse Funds 45,755 4-5,755

1547) 40.45 1 39,904

U.56,06.5 &9175989 &170,.586
Fu-vL otP§ assets
·Not quoted Hot quoted
QuatEd nutket mar1tet price martet price
price in an in<nacl1ve inanacti,oe
active market rnar!E marlcet
(l.evef 1) (level 2) ~3) Total

'1"MM'*'*•*4" '• *t@!ftfNfJ

183,659 242..212 42S,871
1.88Q6M 832.2:26 i.11yoo

-
....,
~
Canadian
Global
383,326

1259,541
342,947
210~
7UJ.73
1.470,104
.., Property 4(),318 553.681 593,999
~
"'£ Pnvate investments 6 20867 620867
Hedge Funds
"' 138,195 138.195

B
n DerivatM5 (1,462) 23824 22J62
Total inYestment assets 1,865,382 2,700.210 &144.%9 6.710Af1
22764
6,733,325

The fair values of the above fixt'd income and equity instrunK>nts are de:termined ba!;ed on quoted market prices in adive marir.ets
whereas the fair values of stratesic investments imd derivativ~ are not based on quoted market pric:es in actrve markets. 1he
actual rebim on plan Msets was $5.74.3 million or 8 68X (2017 - $510.0 million or 8.04'6)-

97

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RSM 320 FALL 20 18

I. DEFlNEDBENEFITPLANCOSTS
Amounts recognized in the Consolidated Sbtementof Income (Loss} and m the consolidated statement of comp.-ehens1v<! income
(loss) in respect to these defined benefit plans are inchcated in the table, below:
Forlhc: Y""' ended t·brch 3 1
Cum:ml sc,,.ricc cost
AdmSiC.tr.ation lcc s (oficr llun imiulmcn& rnoro cc.mcnl fe es) 6,490
lnicrul cm! ort dc&lcd bcnc.lil dilic~tion 248.141 241,905
in.tcrt.:S't ir'ICOfr..-C Oil pbl'I ~SSiC:l::s (248,7271 12311.195)
Other 9'89 907
ua656 122,101
Lc s.s:
R cmc ;15u~mcnts rccor:niTcd in other comorchcmft-c income lbss) ( 9Q.187t 1169,696)
Taul 20 4'69 (47,595)

Retained earnings include $668.0 million of cumulative actuarial gains as at Maren 31, 2018 (Mardl 31, 2017 gains -
$569.8m1U1onJ_
The total expense recognized in net results has been recorded in the Corporation's Consolidated Statement of Income (Loss) as
follows:
For Che ) '<:¥ c ntk:d M ;ir<:h 3 t

TclooiWan, raodio Ol1d d.itibl scMcc:s airts U3,,909 117)17

TnnsmisSion, diobh!tion and colb:lion 3,,560 l.Ml
Co!E!!r.i!C m~mc.nl 1.197 1..221
Total Ull,6 56 t22,.10t

For" the year ending Mardi 31. 2018. the total expense related to employee benefits. vmidl includes all salary and related costs.
was $997.3 million(2017-S9361 million)_

--END OF EXMTNATION-

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