Locate the 2004 financial statements for The Walt Disney Company on the Internet and consider the following questions:
1. What depreciation method does Disney use for its parks, resorts, and other property? For its film and television costs?
2. Where do you have to look to find out that Disney’s 2004 total depreciation and amortization expense was $1,210 million?
3. As of September 30, 2004, what percentage of film and television production costs was expected to be amortized within the next three years?
4. In 1996, Disney acquired ABC. The following information concerning the acquisition was provided in Disney’s 1997 annual report:
On February 9, 1996, the Company completed its acquisition of ABC. The aggregate consideration paid to ABC shareholders consisted of $10.1 billion in cash and 155 million shares of Company common stock valued at $8.8 billion based on the stock price as of the date the transaction was announced. The acquisition has been accounted for as a purchase and the acquisition cost of $18.9 billion was allocated to the assets acquired and liabilities assumed based on estimates of their respective fair values.
Assets acquired totaled $4.0 billion (of which $1.5 billion was cash) and liabilities assumed were $4.3 billion. A total of $19.0 billion, representing the excess of acquisition cost over the fair value of ABC’s net tangible assets, was allocated to intangible assets and is being amortized over forty years.
As seen in the consolidated balance sheet of Disney’s 2004 financial statements, the original cost associated with the total goodwill was only $16.966 billion as of September 30, 2004. What do you think is the explanation for this difference between the $19.0 billion originally recorded for goodwill and the $16.966 billion listed in 2004?

  • CreatedApril 07, 2012
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