All Extreme Wrestling All Extreme Wrestling (AEW) is a large, multinational entertainment company that delivers wrestling content year- round to a global audience. AEW delivers its content through various media, such as cable television, pay-per-view (PPV), the Internet, and books. AEW's mission statement is: To be an international leader in the creation and delivery of wresting-related entertainment content across various platforms. AEW started out in 1965 as a small, regional wrestling company in Calgary, Alberta. AEW hosted live wrestling events in various cities in Alberta. Generally, the company would rely upon Canadian wrestling talent, occasionally attracting a large headlining superstar from the United States or Japan. In 1975, AEW expanded to offer live shows across Canada. The company's big break came in 1981 when it landed a television deal to broadcast its wrestling pro- gram once a week, live from various locations across Canada. The television deal led to a more international audience and a rapid expansion into the United States. AEW experienced significant growth during the 1980s and early 1990s. However, the company felt some grow- ing pains during the mid-1990s when the general public began to suspect that wrestling was staged. At this point, the company decided to rebrand itself as an entertainment company, as opposed to a competitive wrestling company. AEW was open about the fact that the wrestling matches were staged, and instead focused on detailed storylines, extreme wrestling stunts, and comedic characters. In addition, AEW immediately embraced the Internet as a means of deliver- ing content and connecting with its audiences. In 2004, AEW went public and is now traded on the Toronto and New York stock exchanges. The company has experienced steady growth since the Internet era, and its share price has reflected the strong performance. After years of strong performance, fiscal 2020 appears to be ushering in a new period of challenges. Transition from pay-per-view events to Internet subscription speciality programming, the continual challenge posed by Internet piracy, and drug scandals have begun to take their toll on the company. In addition, new companies are beginning to challenge AEW's status as an industry leader. The most challenging issue has been the company's development and launch of the AEW Network (AEWN). AEW is a monthly subscription-based speciality channel that provides subscribers with 24/7 access to AEW material. AEWN is available through most cable providers, AEW's website, or a mobile app. Subscribers pay $9.99 per month for AEWN, and can cancel any time after a minimum of six months. AEWN offers subscriber access to the monthly PPV events, and therefore, AEWN subscribers reduce the number of PPV purchases. After spending significant amounts to develop the AEWN technology and acquire additional content to build up historical libraries, the network launched during the most recent fiscal quarter. Analysts were concerned with the low number of subscribers and the backlash from cable providers about losing PPV revenue. Some cable providers have threatened to drop AEW content due to the competition provided by AEWN. The market has punished AEW's share price for the preliminary poor results from the launch of AEWN. The shares are down 16% from their all-time high of $42 per share since the third-quarter financial statements were released. Further declines, of up to 50% of the market capitalization, are expected if analysts' consensus earnings estimates for the fiscal year are not achieved. The poor performance of the AEWN has resulted in a corporate shake-up, and many of the executive-level manage- ment team has resigned. The CEO, Owen Daniels, has recently hired you as the new CFO. Owen is the company's founder and visionary. He is expecting that analysts' expectations will be met once fourth quarter earnings are released. Owen hands you the AEW's previous four years of annual financial statements, along with the financial results for the first three quarters of this fiscal year, 2020 (Exhibit D). Owen has received a report from the accounting group that shows fourth-quarter profit (after taxes) of $40.5 million. However, the figures do not include the impacts of various accounting issues. Owen provides you with a file of outstanding accounting issues as prepared by the previous CFO before his resignation (Exhibit II) that have yet to be reflected in fourth-quarter earnings. Owen would you like you to prepare a report that provides a recommendation for the appropriate treatment of each accounting issue. In addition, Owen would like you to provide an estimate for annual earnings per share. Analysts are expecting the annual EPS to be $0.05 per share