Blockbyster Case Analysis

Case Analysis [BLOCKBUSTER VIDEO ] The Context megahit moving-picture show Inc is the largest reach of video rental industry worldwide. Over the years the video entertainment industry has witnessed rapid increment in megahit?s earnings and market share, megahit?s gross sales grew from $8.1 million in 1986 to $136.9 million in 1988, leading to an adjoin in their var. prices by 354% in one year, 1988. On may 9 1989, the upward rise of Blockbuster?s share prices came to a sudden halt, Blockbuster?s stock prices dropped by more than 10% on extremely life-threatening volume of 1.5 million shares, which was ca employd by Lee J. Seidler?s report, titled, Blockbuster: The Accountants Earn Their Pay. The report has had a significant do on Blockbuster?s share price. Seidler, a major(postnominal) managing director and invoice analyst at Bear Sterns & order released a report that explained why Blockbuster was experiencing high growth returns during 1988. Seidler?s report claims that aggressive accounting practises were employ to encourage boost Blockbusters earnings and share prices. Changes in amortization, nonrecurring sales to forward-looking franchisees, and overstating good lead helped accelerate the firm?s earnings. Blockbuster responded to Seidler?s report by issuing saying that their poem equal the best estimate at the time.

Current Accounting standards, some(prenominal) Canadian GAAP and IFRS, will be used to study this case and to find out whether Blockbuster?s numbers represent the best estimates or represent aggressive accounting practises. This isn?t the first time Blockbuster?s use GAAP (US GAAP was used) in their financial reporting, however, it will be the first time Canadian GAAP and IFRS are used to tackle Blockbuster?s financial reporting issues. Since Blockbuster is a public 1 Case Analysis [BLOCKBUSTER VIDEO ] company, with outstanding shares, GAAP and IFRS will act as a constraint to the firm?s earnings and financial ratios. Stakeholders and Financial Reporting Objectives... If you want to run a full essay, order it on our website: Ordercustompaper.com

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