CA9.2 Finance Cando Communications (CC) is a public company that owns and operates 10 broad cast television stations and several specialty cable channels, 10 newspapers (including the International Post), and many other non-daily publications . It has a 57.6% economic interest in Australia TV (in Australia) and a 29.9% interest in Ulster TV (in Northern Ireland) According to the notes to the annual financial statements, the company owns approximately 15% of the shares and all of the convertible and subordinated debentures of Australia TV. The con vertible debentures are convertible into shares that would represent 50% of the company's total is sued shares at the time of conversion. In total, including the debentures, the investment in Australia TV yields a distribution that is equivalent to 57.5% of all distributions paid by Australia TV.CC has a contractual right to be represented on the board of directors and has appointed three of the board's 12 members. Although the company has made an attempt to influence the decisions made by Ulster TV manage ment, it has been unsuccessful and does not have any representation on the board of directors. Investments represent approximately $150 million (about 5% of total assets). Even though revenues were up by 15%, net income was only $8 million for the year, down from $50 million the prior year. Instructions Adopt the role of a financial analyst and analyze the financial reporting issues

1. the first issue could be the reporting of investments and valuation,
2. fluctuations and changes in the net income of the company
3. and recognition of revenue

for issue number 1 we have 3 alternatives to apply

1. fair value method to value the company investments which involves reporting them at the market value.
2. equity method which means they recognize their share of ulster and Australia TVs net income or loss in their financial statements
3. cost method they can apply this method for the investments that are not high significant , reporting them at their original cost and adjusting if necessar

Which alternative do you recommend for Issue1? Justify your answer.

What are the alternatives available for Issue 2?

Which alternative do you recommend for Issue2? Justify your answer.

What are the alternatives available for Issue 3?

Which alternative do you recommend for Issue3? Justify your answer.

What are two restrictions that are in place for the accounting policies that Cando may follow?

Are Cando's investments in line with their strategic goals?