FIN400 Critical Thinking 3 Reading case 4-5 “Celtics” in the textbook

FIN400 CRITICAL THINKING 3
Name:
Instructor:
Institution:
Date:
Introduction
For the success of any corporate or simply, any business organization, sound financial decisions have to be observed at all times. These decisions go hand in hand with the various financial requirements that fuel the organization’s running. As a result, there is a clear need for proper financial reporting, since this will play a role in the determination of the company’s future plans. The same applies across the board, and even to NBA franchise such as the Boston Celtics, whose financial reporting can help shed further light on the way forward as far as business is concerned.
(a). Comment on the amortization of NBA Franchise and Other Intangible Assets.
Upon observing the financial records, it is worth noting that across the three year period, there seems to be a constant spread of the franchise’s intangible assets as well as the depreciation (Gibson, 2011). This is evident from the fact that the value is almost the same one year to the other. It is also evident that the business seems to be working based on a third party’s goodwill. Nevertheless, amortization works on an almost constant rate throughout. The business seems to fail to observe such a rule, as can be seen with the higher payment on intangible assets in the first year compared to the two subsequent years that follow (Wahlen et.al.2015). This goes against the fundamental rules of amortization.
(b). Would the discontinued operations be included in projecting the future? Comment
Discontinued operations are usually deemed as a subset of intangible assets, because at one time, they generated income and hence have some specific value to them (Wahlen et.al.2015). It is important to note that these are activities that the company projects to be a source of income too. As a result, such operations need to be part of the income. Consequently, they are supposed ...