Refer to the notes to the consolidated financial statements for Corus Entertainment Inc. in Appendix A at the end of the textbook.
Instructions
(a) Note 3, Basis of Presentation, states that the financial statements have been prepared on a [historical] cost basis except for derivative financial instruments and available-for-sale financial assets, which are measured at fair value. Corus's available-for-sale financial assets are short-term investments in marketable securities classified as current assets. Why does Corus report these investments at fair value?
(b) Note 3, Revenue Recognition, describes Corus's revenue recognition policy. When does Corus recognize revenue for advertising and subscriptions? These statements are prepared using the earnings approach to revenue recognition. What revenue recognition criteria must be met for this type of revenue?
(c) Note 27, Commitments, Contingencies and Guarantees, discloses that Corus has purchase commitments for future pro- gram and film expenditures of approximately $61.7 million as well as $97,000 for future television script productions. Do you think this additional disclosure was necessary? Explain why or why not, referring to the appropriate concepts or items from the conceptual framework of accounting in your answer.
(d) Corus's independent auditors' report is provided in Appendix A with the company's financial statements. What is the purpose of an independent audit? What opinion did Corus's auditors pro- vide in the auditors' report.