Interpreting the equity method footnote In its March 31, 2017, SEC Form 10-K, Lions Gate Entertainment Corp.
Question:
Interpreting the equity method footnote In its March 31, 2017, SEC Form 10-K, Lions Gate Entertainment Corp. (Lionsgate) reports unconsolidated equity method investments at $322.9 million on its balance sheet and $10.7 million on its statement of income. Additionally, the company presents the following material information about its unconsolidated equity method investments in the footnotes of its March 31, 2017 10-K:
a. What is the total dollar amount of net income recognized by EPIX during the year ended March 31, 2017 that does not include intercompany transactions with Lionsgate?
b. Which has a higher variance: the eliminations of profits on licensing sales or the subsequent realization of gross profits on licensing sales? Please explain why these items have a different pattern of affecting the Equity Investment income.
Accounting Principles
ISBN: 978-1119048473
7th Canadian Edition Volume 2
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak