Summary:
The article summarize about Canada Pension Plan Investment Board have buy eight malls to invest to their company. The Canada Pension Plan Investment Board is a federal Crown corporation that collects funds not needed by the Canada Pension Plan and using it to invest. The Canada Pension Plan is a earnings-related social program that recommend people who are 18 years or older to contribute some of their earnings to them and in exchange they will get benefits when they are older. They now own 100% ownership to six malls and 90% ownership to two malls which bring a total of 333.5 millions in investment. The money they got to purchase the eight malls is from a past investment which equal up to 230.5 million dollars and they also get 105 million dollars in a loan. They want to invest in malls because it would help expand their company in Canada and it would also boast their assets in their company too. CPPIB have invested many of their real estates around the world like Asia, United States, Mexico, and continental Europe. All of their real estates have added up to 7.9 billion dollars and 3.6 billions belong to Canada. They also have invested everything from public and private equities to real estates, infrastructure, and fixed-income instruments.
Connections:
The article show examples of financing, operating, and investing activates. One connection is when CPPIB got a loan of 105 million dollars to purchase the eight malls is a perfect example of financing activities because they decide to borrow money to help expand their corporation. Also accordingly to chapter 1 this decision of borrowing money can decide whether the corporation will grow and make profit or they will make a bad investment in this situation. Another connection is CPPIB invests everything from public and private equities to real estate, infrastructure and fixed-income instruments is a perfect example of operating activities because they are using their investments to earn revenue. The last connection is CPPIB investing on the eight malls is a perfect example of investing activities because they must spend a lot of money to purchase the properties (eight malls) and to generate assets to be used in operating activities.
Reflection:
CPPIB is a corporation that is owned by the government which means people who are 18 years or older must contribute a prescribed portion of their earnings to the Canada Pension Plan. But the funds not needed from the Canada Pension Plan is used to invest to the CPPIB so they basically take that extra funds and invest it to get more revenue for them. Basically I think that people shouldn’t trust anything the government supplies to us because they’re just taking our money we give to get benefits and using the extra funds to invest and get revenue for them not for us. Also does CPPIB have enough money to supply elderly people because by the time we get older is there any funds left for us? I think the pension plan would give us a small amount of benefits back than today because they basically try to get gain as much profits as they can and only giving elderly people small amount of it.
After reading your analysis i disagree with when you said that the CPPIB uses the extra funds to invest to get more revenue is a bad thing. Although they do that, i think that it's a good thing that the CCPIB uses the extra funds to try to generate more revenue for the company because ultimately the more money generated will equal more funds they are able to supply to the elderly. In the future when it comes to us as being the elderly, i believe there will be more funds for us and not less because the CPPIB will have generated more revenue. The more that the company invests into certain things ultimately generates more money. It's a good thing that the company is building up its business at the present time, i believe one day they will be a major benefit for everyone in Canada.
ReplyDeleteJoshua Thang
ReplyDeleteFinancial Accounting 12
I agree with your connection because in the future, I believe there will be many new models of mobiles coming out. There will never be an end to our world of technology because technological changes generate a lot of revenue for manufacturers who produce electronic devices. However, I thought you could of discussed some in-depth connections such as how the revenue generated by AT&T concerns the revenue recognition criteria. When companies follow the GAAPs, they concern how revenues and expenses are recognized when they are earned and not necessarily in the period in which the cash inflow or outflow occurs. The AT&T follows the accrual accounting method because it recognizes revenue and expenses in their accounting period. Whenever there is revenue, there has to be some expenses related that helped to generate revenue. The expenses must be matched with the revenue on the income statement in order to be recognized. You could also have included what accounts in the business journal would have been affected by these increase in sales. If the transactions involve sales, it would mean that cash or accounts receivable would be debited and sales would be credited. If expenses are involved in a transaction such as advertising expense, we would debit advertising expense and credit cash or accounts payable. At the end of the accounting period, if there was more revenue than expenses, it would generate a net profit in the business income statement and an increase in the owner's equity in the business balance sheet. I agree with your opinion because there are many mobile producers that sell mobiles. It just depends who has the better products and which company can attract the most consumers.