Canadian Tire Corporation, Limited is composed of two main business operations that off er a range of retail goods and services, including general merchandise, apparel, sporting goods, petroleum, and financial services. Exhibit 9.9 contains Note 3 setting out the accounting policies applied for sales and warranty returns and customer loyalty programs and Note 18 detailing Canadian Tire’s provisions from its 2016 financial statements.

EXHIBIT 9.9 Excerpt from Canadian Tire Corporation, Limited’s 2016 Annual Report

3. Significant accounting policies

Sales and warranty returns

The provision for sales and warranty returns relates to the Company’s obligation for defective goods in current store inventories and defective goods sold to customers that have yet to be returned, aft er sales service for replacement parts, and future corporate store sales returns. Accruals for sales and warranty returns are estimated on the basis of historical returns and are recorded so as to allocate them to the same period the corresponding revenue is recognized. These accruals are reviewed regularly and updated to reflect Management’s best estimate; however, actual returns could vary from these estimates.

Customer loyalty

An obligation arises from the “My Canadian Tire ‘Money’TM” customer loyalty program when the Company issues electronic Canadian Tire ‘Money’® and when the Dealers pay the Company to acquire paper-based Canadian Tire ‘Money’, as the Dealers retain the right to return paper-based Canadian Tire Money to the Company for refund in cash. These obligations are measured at fair value by reference to the fair value of the awards for which they could be redeemed and based on the estimated probability of their redemption. The expense is recorded in Selling, general and administrative expenses in the Consolidated Statements of Income.

18. Provisions

The following table presents the changes to the Company's provisions:

Required

a. Using the information from Notes 3 and 18 in Exhibit 9.9, explain how Canadian Tire accounts for its sales and warranty returns provision, including the financial impacts on the company’s 2016 financial statements.

b. The Canadian Tire “money” program is the company’s most significant loyalty program. Using the information from Notes 3 and 18 in Exhibit 9.9, explain how the company accounts for its loyalty programs, including the financial impacts on the company’s 2016 financial statements.

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2016 Site restoration and decommissioning $ 38.3 Sales and Customer warranty returns (C$ in millions) Balance, beginning of year Charges, net of reversals Other Total loyalty $ 86.2 $ 120.5 $16.8 $ 261.8 176.6 301.9 3.9 6.0 488.4 2016 Sales and Site restoration warranty returns and decommissioning (1.3) (1.6) Customer (C$ in millions) Utilizations Discount adjustments Balance, end of year Current provisions Long-term provisions Other Total loyalty (161.5) (279.5) 0.6 (8.0) (450.3) (0.8) 0.2 $ 143.5 $ 39.3 $ 101.3 $ 299.1 $15.0 8.3 137.1 6.5 101.3 253.2 32.8 6.7 45.9 6.4