{br} STUCK with your assignment? {br} When is it due? {br} Get FREE assistance. Page Title: {title}{br} Page URL: {url}
UK: +44 748 007-0908, USA: +1 917 810-5386 [email protected]

On May 9, 1989, Bear Stearns & Co. issued a report on Blockbuster Entertainment Corp., which is
reproduced in part below.
Blockbuster-Entertainment (Ticker symbol: BV, Price per share: $33 ½) increased owned and franchised
video stores from 19 at the end of 1986 to 415 at December 31, 1988. In the same period revenue
jumped from $7.4 million to $136.9 million. Reported earnings also leaped; from $.34 per share in 1986 to
$.57 per share in 1988. The stock carries an historical Price to Earnings ratio of 59, and there were
25,741,549 shares of common stock issued and outstanding as of 12/31/88.
A) Some of Blockbuster’s mergers with other video rental companies have been recorded as purchases.
In a merger treated as a purchase, the price paid is first allocated to the fair values of assets that can
be kicked, picked up or painted. Any excess paid for the company beyond these “fair values”
becomes goodwill, which Blockbuster labels “intangible assets relating to acquired businesses.” APB
Opinion 17 requires that goodwill be amortized to income (expensed) over 40 years or less.
In the past, many companies automatically adopted 40 year amortization. Current practice (which is
usually required by the SEC) is to relate the amortization period to the nature of the business
acquired. Thus in a typical hi-tech acquisition the SEC requires goodwill to be amortized over 5 to 7
years; in bank purchases, over 15 to 20 years.
Other information: Eight of the eighty company-owned stores that appeared in the 1987 10-K (annual
filing with the SEC) are not on the 1988 list. The maximum term of the company’s franchise
agreements is 25 years.
1) What is Blockbuster’s amortization timetable? Do you think it is appropriate?
2) What would be the impact on Blockbuster’s 1988 earnings per share if 5 year amortization
were applied to this goodwill?
B) On April 20, Blockbuster announced an agreement to merge with its largest franchisee, Video
Superstore. Video Superstore was Blockbuster’s largest customer for videotapes, accounting for 10%
of such sales in 1988, 21% in 1987, and 48% in 1986.
Since intra-company transactions are eliminated from the financial statements (it doesn’t make sense
to record sales to yourself!), these sales will disappear next year.
3) What would have been the effect on earnings per share if Video Superstore purchases were
not included in 1988 revenues?
C) BV drastically slowed its depreciation (amortization) of “hit* video tapes at the start of 1988. In 1987
BV depreciated its rental videotape “hits” over nine months, straight line. At the start of 1988, it
switched to a method it called “36 month accelerated.” The financial statements do not disclose how
accelerated the curve is, but do say that the company uses 150% of straight line, computed on a
monthly basis. Thus, the resulting depreciation is as follows:
First 12 months
40%
Second 12 months
30%
Third 12 months
30%
4) Over what period does BV depreciate its “base stock” videotapes?
5) What was the effect on earnings per share of the change in depreciation method for “hit” tapes
(assume that hit tapes made up 25% of new tape purchases, and that the average hit tape
was owned for half the year)?
D) BV also sells videotapes. However, most of the sales are in bulk to new franchisees, rather than to
store customers. In 1988, 68% of sales were to franchisees.
6) What was the effect on earnings per share of these sales to franchisees?
E) BV charges franchisees various fees and discloses them in a somewhat confusing manner. The
income statement shows, in revenues:
Royalties and other fees $8,142,000
However, Note 1 to the financial statements lists:
Royalties and other fees $7,590,000
Area Development fees 550,000
Initial franchise fees
2,415,000
The first two items total to the income statement amount, the third seems to be buried, inexplicably, in
rental revenues.
7) What was the effect on 1988 earnings per share, of the non-recurring items: area development
fees and initial franchise fees?
8) What would BV’s 1988 earnings per share be after all of the above adjustments?
9) Ignoring #3 above, what would BV’s 1988 earnings per share be after
the above adjustments?
10) What would BV’s Price/Earnings ratio be, given all of the above
adjustments (including #3)?

Sample Answer

Compelling correspondence is essential to the achievement all things considered but since of the changing idea of the present working environments, successful correspondence turns out to be more troublesome, and because of the numerous impediments that will permit beneficiaries to acknowledge the plan of the sender It is restricted. Misguided judgments.In spite of the fact that correspondence inside the association is rarely completely open, numerous straightforward arrangements can be executed to advance the effect of these hindrances.

Concerning specific contextual analysis, two significant correspondence standards, correspondence channel determination and commotion are self-evident. This course presents the standards of correspondence, the act of general correspondence, and different speculations to all the more likely comprehend the correspondence exchanges experienced in regular daily existence. The standards and practices that you learn in this course give the premise to additionally learning and correspondence.

This course starts with an outline of the correspondence cycle, the method of reasoning and hypothesis. In resulting modules of the course, we will look at explicit use of relational connections in close to home and expert life. These incorporate relational correspondence, bunch correspondence and dynamic, authoritative correspondence in the work environment or relational correspondence. Rule of Business Communication In request to make correspondence viable, it is important to follow a few rules and standards. Seven of them are fundamental and applicable, and these are clear, finished, brief, obliging, right, thought to be, concrete. These standards are frequently called 7C for business correspondence. The subtleties of these correspondence standards are examined underneath: Politeness Principle: When conveying, we should build up a cordial relationship with every individual who sends data to us.

To be inviting and polite is indistinguishable, and politeness requires an insightful and amicable activity against others. Axioms are notable that gracious “pay of graciousness is the main thing to win everything”. Correspondence staff ought to consistently remember this. The accompanying standards may assist with improving courtesy:Preliminary considering correspondence with family All glad families have the mystery of progress. This achievement originates from a strong establishment of closeness and closeness. Indeed, through private correspondence these cozy family connections become all the more intently. Correspondence is the foundation of different affiliations, building solid partners of obedient devotion, improving family way of life, and assisting with accomplishing satisfaction (Gosche, p. 1). In any case, so as to keep up an amicable relationship, a few families experienced tumultuous encounters. Correspondence in the family is an intricate and alluring marvel. Correspondence between families isn’t restricted to single messages between families or verbal correspondence.

It is a unique cycle that oversees force, closeness and limits, cohesiveness and flexibility of route frameworks, and makes pictures, topics, stories, ceremonies, rules, jobs, making implications, making a feeling of family life An intelligent cycle that makes a model. This model has passed ages. Notwithstanding the view as a family and family automatic framework, one of the greatest exploration establishments in between family correspondence centers around a family correspondence model. Family correspondence model (FCP) hypothesis clarifies why families impart in their own specific manner dependent on one another ‘s psychological direction. Early FCP research established in media research is keen on how families handle broad communications data. Family correspondence was perceived as an exceptional scholastic exploration field by the National Communications Association in 1989. Family correspondence researchers were at first impacted by family research, social brain science, and relational hypothesis, before long built up the hypothesis and began research in a family framework zeroed in on a significant job. Until 2001, the primary issue of the Family Communication Research Journal, Family Communication Magazine, was given. Family correspondence is more than the field of correspondence analysts in the family. Examination on family correspondence is normally done by individuals in brain science, humanism, and family research, to give some examples models. However, as the popular family correspondence researcher Leslie Baxter stated, it is the focal point of this intelligent semantic creation measure making the grant of family correspondence special. In the field of in-home correspondence, correspondence is normally not founded on autonomous messages from one sender to one beneficiary, yet dependent on the dynamic interdependency of data shared among families It is conceptualized. The focal point of this methodology is on the shared trait of semantic development inside family frameworks. As such, producing doesn’t happen in vacuum, however it happens in a wide scope of ages and social exchange.

Standards are rules end up being followed when performing work to agree to a given objective. Hierarchical achievement relies significantly upon compelling correspondence. So as to successfully impart, it is important to follow a few standards and rules. Coming up next are rules to guarantee powerful correspondence: clearness: lucidity of data is a significant guideline of correspondence. For beneficiaries to know the message plainly, the messages ought to be sorted out in a basic language. To guarantee that beneficiaries can without much of a stretch comprehend the importance of the message, the sender needs to impart unmistakably and unhesitatingly so the beneficiary can plainly and unquestionably comprehend the data.>

Our customer support team is here to answer your questions. Ask us anything!