BOWMAN ENTERTAINMENT PLC

Accounting and Decision Making - Bowman Entertainment Plc (BEP)

Task 1 - Areas of Subjective Judgment in BEP's Financial Statements1

Subjective Judgment in Balance Sheet1

Assets2

Liabilities2

Shareholders' Equity2

Subjective Judgment in Income Statement3

Task 2 - Statement of Cash Flows for BEP3

Task 3 - Trend Analysis of BEP's Financial Performance4

Task 4 - Analysis of BEP's Cash Management5

Task 5 - Evaluation of Sports Events International (SEI) Offer7

Task 6 - Critical Analysis of KFun's Cash Flows8

Task 7 - Evaluation of KFun Investment8

1)KFun's Investment Appraisal and Recommendation8

2)Advantages and Disadvantages of BEP's Fund Raising Approach10

Possible Impact of Financing Structure11

3)Other Factors Affecting Potential Acquisition12

References13

Accounting and Decision Making - Bowman Entertainment Plc (BEP)

Task 1 - Areas of Subjective Judgment in BEP's Financial Statements

Eccles and Riedl (2008, p. n.d.) claim that projections about the corporate performance may require increased role of subjective judgment, which may put business executives and senior management at the risk of reporting inaccurate information. However, organizations are required to make use of subjective as well as objective judgment in preparing and reporting financial statements (Deloitte, 2010, p. 1). In order to prepare and communicate the financial and accounting information with the key stakeholders, organizations such as BEP may take assistance from the published guidelines of IASB conceptual framework and GAAP standards (IFRS, 2012, p. 1).

IAS disclosure requirements facilitate stakeholders in understanding subjective judgment areas of financial statements and their possible impact on the reported financial results. Clendon (2011, p. 1) states that Companies Act 2006 and IASB assesses fairness of a firm's financial statements on the basis of income and balance sheet elements and nature of reporting implied by a particular firm. Comprehensive analysis of BEP's financial statements for the FY 2008 identifies incorporation of subjective judgment in the following items of financial position and financial performance of BEP.

Subjective Judgment in Balance Sheet

Analysis of the balance sheet shows that BEP has prepared financial statements in basic compliance with the conceptual framework of IASB.

Assets

BEP classified business assets into two main sections including current and non-current assets. In accord with IAS and GAAP, BEP carefully assessed and reported share of each asset to the business position. However, indistinctness was observed regarding the disclosure of asset ownership. Under the section of notes to financial statements, BEP did not provide a clear view on the true ownership and legitimate control over business assets. In the light of IAS 17, a firm is bound to disclose the true ownership of business assets. Hence, a possible change is suggested in disclosing asset ownership by differentiating between owned and leased assets.

Liabilities

In accord with IASB framework, liability side of the balance sheet is required to be subdivided into current and non-current liabilities in order to assist key stakeholders. BEP complied with the IAS requirement by reporting current and non-current liabilities during FY 2008. In addition to this, BEP has sub-categorized current activities into trade payables and dividend payables.

Shareholders' Equity

Under this section, IASB framework requires a firm to report original amount of capital investments, non-controlling assets and business ...