Mondays are no worse than Tuesdays, Wednesdays, and Thursdays!

Here’s a decent article about the requirement for employers to be creating mentally healthy workplaces for employees.

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A few comments grabbed my attention. First, “unpaid overtime can lead to mental harm” – having worked in the accounting profession and now in higher education, I don’t think I’ve ever experienced paid overtime – does that exist?  Unpaid overtime is fun for a while, when you love what you’re doing you can always “buckle down and get it done” but eventually we’ll burn out.  Work hard and then slack off is my advice.  Slacking off means yoga or golf in my case.

The second great comment comes later in the article, “positive psychological health occurs when organizations offer consistent recognition and acknowledgement and are fair”.  So true.  Acknowledgement and recognition go a long way.  If you’re a manager or a boss try encouraging an employee once a day.  I suspect that will contribute to a much healthier workplace.  For some reason, people find giving (and receiving) compliments difficult.

Last comment: what about Fridays?  Are they just that much better?

Lennart Green – some amazing card tricks!

So this TED talk is a bit out of the norm for this blog – nothing to do with education really.  It is highly, HIGHLY entertaining and very funny.  Lennart is described as “your rumpled uncle doing card tricks at the dinner table” which is actually very accurate.  He’s fantastic: slight of hand, self-deprecating, great showmanship.  Watch and enjoy!  If you don’t find him entertaining, watch the blonde volunteer’s face as she experiences these tricks close up; she’s worth the price of admission on her own!


Another tragic shooting involving mental illness

So sad for everyone involved.  Another shooting in the States, this time at Texas A&M.  Apparently the shooter had mental health issues in the period leading up to yesterday’s tragic event.  I hesitate to post this; I don’t want anyone to think that people with mental illness are all dangerous.  Two things seem clear to me after too many of these stories: (1) better gun control is required (sorry NRA) and (2) we all need to watch out for each other and ensure that everyone has access to terrific mental health resources.  If a colleague, friend, neighbour or family member is mentally under the weather it is our responsibility to make sure they seek AND GET the necessary help.  I’m not an expert by any means but I will commit to learning more so I can help the people around me.  I will commit to taking the mental health first aid course offered in Kelowna this fall through CMHA.

If you’re interested in finding out more about mental health, start here.

Click the image below for the full story.

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A gas purchase explodes into thin air

An interesting story came out the other day about BHP Billiton’s CEO refusing his bonus since the company was going to record a $3 billion write down of some of its oil and gas assets.  $3 billion sounds like a lot to you and me but when you look at the last few years of BHP’s performance, total revenue over the past three years: $175 billion; total net income over the same period: $43 billion.  If the write down seems insignificant to you, that’s partially a result of seemingly massive government debts that has transformed the scale of money for us – for instance look at the US debt ($15 Trillion!!) or the Greek debt (at the time of writing, €355 billion ~ $436 billion Cdn).

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Nonetheless, Mr. Kloppers, the CEO of BHP, is willing to give up his bonus of a few million dollars, presumably as a sign of solidarity with the shareholders.  It’s a nice gesture although I suspect he’s not suffering too much from the financial hit.  Still, leadership should involve a bit of sacrifice and personally I like his forfeiture.

Millionaire bonuses aside for a minute, where did the write down actually come from?  Similar to the post about Microsoft, BHP’s write down is related to recent acquisitions.  In this case, BHP purchased significant oil and gas companies in the past few years, particularly Fayettville in the US for $4.75 billion last year (2011).  When you look at the natural gas commodity price, you see that prices have fallen roughly 25% in the past year.  

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The sage advice, “buy low, sell high” rings true for all corporate acquisitions, even when we’re talking billions of dollars.  Let’s break this down into smaller steps:

  • Feb 2011: BHP purchases the Fayettville project when natural gas is trading at $4.50 per mmbtu (a million BTUs – the common measure for gas) and pays $4.75 billion.
    • DR Long Term Asset $4.75 Billion, CR Cash $4.75 Billion
  • July 2012: The commodity price has fallen, BHP does not expect it to rebound in the near term.  They must believe that the Long Term Asset cannot recover the full price paid, in fact they believe they will only recover approximately 1/2 the price.  Accounting rules require them to write the asset down:
    • CR Long Term Asset $2.8 Billion, DR Writedown expense $2.8 Billion

I’ve seen many of these commodity-based massive write downs and corporate crises.  For instance, take a look at Inco Ltd.’s write down (or lack thereof) on its Voisey’s Bay nickel project or Teck Cominco’s crisis after purchasing Fording Coal in 2008.  While these are massive dollar amounts on fairly complex business deals involving huge tracts of land, the accounting concept is relatively simple and applies equally to mining companies and all other businesses equally.  Assets cannot be shown on the balance sheet (statement of financial position) for more than they are likely going to earn.  We refer to this concept as impairment (see for example IAS 36 and ASPE 3063) – its a fundamental concept of financial accounting.  Research in Motion may have inventory it can’t sell?  That’s impairment.  BHP has millions of BTUs of natural gas that it will sell for less than it expected?  That’s impairment. In my opinion, impaired asset write downs are one of the most important concepts.  Unfortunately the information required to determine if an asset is impaired is usually highly asymmetric; that is, management has much better information than most other stakeholders.  Hopefully management is ethical and takes their financial reporting responsibilities seriously. Without that level of trust, the value of financial statements quickly falls apart.

Note: this blog was originally posted on my site hosted by Pearson Education (

Microsoft’s microloss?

Microsoft is not in the same dominant position it was in the late 1990’s when it had virtually 100% of the desktop operating system market.  Flash forward 20 years to 2012 and Microsoft’s share of the office software suite market has increased but its dominance in the desktop operating system market has not been maintained (see below, its roughly 80% with Windows 7 & Windows XP).  


Microsoft has also lost significant market share in other areas including smartphone operating systems – do you know anyone that uses a Windows phone?   Apparently 3.8% of us do.

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Despite these negative shifts in market share, I was a bit surprised to see that Microsoft recorded its first ever loss in 26 years as a publicly traded company, roughly a $500 million loss.  The graph below represents the last 16 quarters (fiscal years 2009 through 2012) of Microsoft’s net income.  Its actually very impressive; despite the loss in Q4 of 2012, Microsoft still earned almost $17 billion dollars in the last twelve months!  Why is the loss interesting?  Start by realizing that it is the first loss in over 100 quarters (26 years); we should be interested in what triggered or caused the loss. It turns out it is an accounting issue rather than something like plummeting sales of Windows or Office software.


Back in 2007 Microsoft purchased another company, aQuantive, for roughly $6.3 billion.  The intent was to use aQuantive’s technology to help boost Microsoft’s revenue from online advertising (primarily via the Bing search engine).  Five years later management has decided that that purchase was not a great use of the money as aQuantive’s technology has not  helped grow revenue as quickly as expected (i.e. not at all).  What does this mean from an accounting perspective?  In 2007, Microsoft purchased an asset, all the shares of aQuantive, for $6.3 billion.  In 2012, management did an assessment of that asset and determined that it is essentially worthless.  Accounting requires that we write down worthless assets so Microsoft  ends up expensing the entire value (the journal entry would be:

CR Long Term Investment in aQuantive [Asset]  $6.3 billion

DR Asset impairment expense [Expense]  $6.3 billion

Therefore net income is decreased by the full $6.3 billion, resulting in an overall loss for the quarter of $492 million.

Some people argue that this is a temporary blip; Microsoft is still generating approximately $6 billion of income per quarter before write downs like the aQuantive one.  In fact the stock market reacted positively to the earnings release so obviously shareholders weren’t too upset by the loss.

On the flip side however, I believe that the write down suggests that either Microsoft made a fairly large investment ($6.3 billion!) in something that turned out to be worthless, shame on them, or their business model, particularly online advertising revenue is suffering substantially.

Its too early to determine if this loss will have repercussions for Microsoft, I will be keeping my eyes and ears open and post anything else related to this matter.

Note: this blog was originally posted on my site hosted by Pearson Education (

Yet another post on drunken student behaviour

I’ve posted before about alcohol use/abuse (and earlier) on campus and while I support the notion of “students growing up” I truly think that universities, administrators, faculty, staff and students need to approach this problem (and it is a problem) with renewed interest.  The article below is about how student groups were shocked/dismayed/upset at the University of Alberta’s recent decision to ban alcohol in public portions of some student residences.  I’m actually surprised that such use was ever allowed.  Yes the drinking age in Alberta is 18 but surely there are many minors in residence and why would public areas of a residence building ever be appropriate for drinking, drunken behaviour, and vomiting?  If you don’t think student drinking is a problem, read this – it’s disturbing and shocking.

A university must be primarily a place of higher education.  That requires a focus on learning and rarely do learning and alcohol go together.  In fact, learning and alcohol ABUSE never go together – well except for the first time you wake up with a hangover and say “never again”.  I’m all for holistic student development; university should not just be about formal learning in the classroom.  This is an excellent time to explore new things and meet new people.  Those don’t require being drunk.  If students think that wandering through four years of university in a drunken haze is acceptable, society has done something incredibly wrong.  If you want to drink your brains out, withdraw from school and fill your boots.

Kudos to the University of Alberta for their stance!

Click the image below for the full article and comments – trust me, the comments are entertaining.

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