a. Issue 1: Proper valuation and accounting treatment of the Australia TV investment.

The accounting for CC's investment in Australia TV. Australia TV is a significant investment for CC, and the company has a significant influence over the company's operations.

Explanation:

However, CC does not control Australia TV, which means that it cannot consolidate Australia TV's financial statements with its own. The company must decide whether to use the equity method or the cost method to account for its investment in Australia TV.

b. Issue 2: Thorough analysis of factors contributing to the substantial decrease in net income also. The accounting for CC's investment in Ulster TV. Ulster TV is a smaller investment for CC, and the company does not have a significant influence over the company's operations.

Explanation:

Therefore, CC must use the cost method to account for its investment in Ulster TV.

c. Issue 3: Evaluation of the unsuccessful attempts to influence Ulster TV management also the The accounting for CC's convertible debentures. CC's convertible debentures are convertible into shares of Australia TV. This means that the debentures could be classified as either debt or equity. The company must decide whether to classify the debentures as debt or equity based on the substance of the arrangement.

 

Here is my question: 

1. Refer to Issue 1 from your answer to question 3. List the alternative accounting policies that are available to resolve the issue.
2. Analyze the alternative accounting policies listed in question 4. Which, among these would you recommend? Justify your recommendation.
3. Refer to Issue 2 from your answer to question 3. List the alternative accounting policies that are available to resolve the issue.
4. Analyze the alternative accounting policies listed in question 6. Which, among these would you recommend? Justify your recommendation.
5. Refer to Issue 3 from your answer to question 3. List the alternative accounting policies that are available to resolve the issue.

Here is the whole scenario: 

Image transcription text

CAg.2 m Cando Communications (CC) is a public company that owns and operates 10 broadcast television stations and several specialty cable channels, 10 newspapers (including the International Post), and many other non?daily publications. It has a 57.6% economic interest in Australia TV (in Australia) and a 29.996 interest in Ulster TV (in Northern Ireland). According to the notes to the annual ?nancial statements, the company owns approximately 1596 of the shares and all the convertible and subordinated debentures of Australia TV. The convertible debentures are convertible into shares that would represent 50% of the company's total issued shares at the time of conversion. In total, including the debentures, the investment in Australia TV yields a distribution that is equivalent to 57.5% of all distributions paid by Australia TV. CC has a contractual right to be represented on the board of directors and has appointed three of the board's 12 members. Although the company has tried to in?uence the decisions made by Ulster TV management, it has been unsuccessful and does not have any representation on the board of directors. Investments represent approximately $150 million (about 5% of total assets). Even though revenues were up by 1596, net income was only 58 million for the year, down from $50 million the prior year.