Academic journal article Journal of the International Academy for Case Studies

Magic Carpet Ride a Financial Reporting Case

Academic journal article Journal of the International Academy for Case Studies

Magic Carpet Ride a Financial Reporting Case

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns corporate financial reporting for a publicly traded company. Secondary issues examined include distinguishing between inventory and property, plant, and equipment, impairment of assets, project termination, discontinued operations, and environmental disposal costs of assets all based on research in the Financial Accounting Standards Board's Accounting Standards Codification. The case has a degree of difficulty consistent with senior level or graduate accounting courses. The case is designed to be taught in one class period and is expected to require six to ten hours of outside preparation by students.

CASE SYNOPSIS

Mecca Media's first foray into online entertainment is causing Joe Dixon, the somewhat colorful CEO of this small public company, more than a little discomfort. Mecca has invested millions in intellectual property rights, PP&E (property, plant and equipment), and (TV) set-top boxes, in addition to committing to a multi-year consulting agreement. Over a year into the Magic Carpet project, revenues are disappointingly below projections and now the CFO and the Board of Directors are questioning the viability of the project. …

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