Topic
Cineplex Starburst Inc
Instructions
- Find the 2015 Consolidated Financial Statements and Management Discussion & Analysis for the year ended December 31, 2015 of Cineplex Inc., read it carefully and highlight anything related to business combinations
- Prepare a report with the following three sections:
- Overview of the acquisition of Cineplex Starburst Inc.
- A detailed analysis of accounting for business combination regarding the acquisition of Cineplex Starburst Inc. (can be done in a table format)
- How did Cineplex’s accountants account for each element of the transaction
- How is each element consistent with IFRS and with what we learned from the text book
- Whether or not other choices could have been available or not for each element
Address the treatment of the Investment in Cineplex Starburst Inc. in prior years and the implications of the additional investment in 2015.
Answer preview
Cineplex Starburst, a leading operator and distributor of arcade games in the amusement industry completed the acquisition as a strategic move to capitalize on its core strengths (Cineplex, 2015). On Oct 1 2015, Cineplex completed the acquisition of the remaining 50% of Cineplex Starburst equity. The outstanding equity was part of what Cineplex did not own, nearly $21.4 million. The acquisition resulted in additional revenue of $75.2 million, or 22.6% in the last quarter of the year, after the additional of the 50% equity.
Analysis of Accounting
How Cineplex’s accountants accounted for transactions elements
Cineplex assets include the resources used to generate revenue. Cineplex accountants expressively present the financial picture of the company’s business transactions. In preparation of the financial record, the report includes the five fundamental accounting elements. They include Assets, liabilities, expenses, revenues and equity.
Word count: 2470