Canadian Tire Corporation, Limited adopted a new accounting policy to measure goodwill and other intangible assets during fiscal 2009 (year ended January 2, 2010). This was a mandated change in accounting policy, with a net impact after income tax of $3.1 million.
On its statement of comprehensive income, Canadian Tire reported profit of $335 million and an other comprehensive loss of $141.1 million for fiscal 2009. It reported a profit of $453.6 million and other comprehensive income of $7.7 million for fiscal 2010.
Canadian Tire also reported revenue, profit before income tax, and total assets, in addition to other selected information, for four reportable segments-Canadian Tire retail, financial services, petroleum, and Mark's Work Wearhouse-in the notes to its financial statements.
Instructions
(a) Explain how the change in accounting policy would affect Canadian Tire's comparative financial statements presented for the year ended January 2, 2010 (fiscal 2009) and January 1, 2011 (fiscal 2010).
(b) Explain how the (1) change in accounting policy, (2) other comprehensive income, and (3) segmented information would affect your analysis of Canadian Tire's financial position and performance in fiscal 2009 and 2010.