RECENTLY SIRIUS XM PURCHASED AN ADDITIONAL 81% OF PANDORA FOR $3 BILLION.IN 2017, SIRIUS HAD PAID $480 MILLION FOR THE 18% INTEREST.RATHER THAN PAYING CASH THIS TIME, SIRIUS XM IS ISSUING 1.44 SHARES OFCOMMON STOCK FOR EVERY ONE SHARE OF STOCK OWNED BY A PANDORASHAREHOLDER. THE ADDITIONAL PURCHASE REPRESENTS A PER SHARE VALUEOF $10.14 TO PANDORA'S SHAREHOLDERS OR A 14% PREMIUM OVER ITSCURRENT STOCK PRICE

REQUIRED:

A. WHAT IS THE ACCOUNTING ENTRY THAT SIRIUS XM RECORDED IN 2017TO REFLECT ITS INITIAL PURCHASE

B. DISCUSS HOW THE 2017 INVESTMENT WOULD BE ACCOUNTED FOR BETWEEN2017 AND THE MOST RECENT PURCHASE. CLEARLY INDICATE THE ACCOUNTINGIMPACT ON EARNINGS - I.E HOW WOULD SIRIUS MAKE OR LOSE MONEY ON THE PURCHASE

C. FOR THE INITIAL PURCHASE, ASSUME THAT PANDORA ELECTED TWO OFFICERSOF SIRIUS TO THEIR BOARD OF DIRECTORS.AS CFO OF SIRIUS, EXPLAINTHE TWO ACCOUNTING OPTIONS YOU NOW HAVE TO REFLECT THE INVESTMENTIN SIRIUS. BE VERY SPECIFIC ON THE DIFFERENCE IN INCOME RECOGNITION.WHICH METHOD WOULD YOU CHOOSE AND WHY?

D. WITH THE RECENT ADDITIONAL PURCHASE, SIRIUS XM MUST DECIDE TO OPERATEPANDORA AS A SEPARATE ENTITY OR NOT. HOW WOULD YOU ACCOUNT FORTHE ACQUISITION? EXPLAIN THE IMPACT ON YOUR ACCOUNTING SYSTEMDEPENDING ON WHETHER YOU DECIDED TO OPERATE PANDORA AS ASEPARATE ENTITY OR NOT

E. TO RECORD THE ADDITIONAL PURCHASE, WHAT BASIS OF ACCOUNTING WILL YOUUSE TO REFLECT THE VALUES OF THE ASSETS AND LIABILITIES ACQUIRED. WOULDYOU HAVE ANY GOODWILL? WHAT MAKES YOU THINK SO OR NOT?

F. ASSUMING YOU DECIDED NOT TO OPERATE PANDORA AS A SEPARATE ENTITY.DESCRIBE THE THREE ACCOUNTING OPTIONS AVAILABLE TO SIRIUS XM TORECORD PANDORA ACTIVITY IN ITS GENERAL LEDGER.IDENTIFY THE MAJOR DIFFERENCES IN THESE METHODSULTIMATELY, WHY DOES IT NOT MATTER WHICH ACCOUNTING METHOD YOUSELECT

G. TWO OF THE METHODS YOU DISCUSSED IN QUESTION F, REQUIRES A SPECIALCONSOLIDATING ENTRY "C". WHY IS THIS ENTRY NECESSARY

H. BASED ON ALL THE ABOVE ANALYSIS YOU PERFORMED WHAT IS THE OBJECTIVEOF THE EQUITY METHOD OF ACCOUNTING AND WHAT IS THE OBJECTIVE OFCONSOLIDATION. ALSO, WHY IS THE EQUITY METHOD OF ACCOUNTING REFERREDTO AS A SINGLE LINE CONSOLIDATION. WHAT ISSUES DO YOU SEE IN THE EQUITYMETHOD OF ACCOUNTING THAT MAY BE CONSTRUED AS MIS LEADING TO INVESTORS.