Cineplex Inc. is currently Canada’s largest film exhibition organization, with theatres in six provinces. Excerpts from its 2016 financial statements are in Exhibits 2.24A to 2.24E.

EXHIBIT 2.24A Cineplex Inc.’s 2016 Consolidated Balance Sheets

CINEPLEX INC.
Consolidated Balance Sheets
(expressed in thousands of Canadian dollars)

EXHIBIT 2.24B Cineplex Inc.’s 2016 Consolidated Statements of Cash Flows

CINEPLEX INC.
Consolidated Statements of Cash Flows
For the years ended December 31, 2016 and 2015
(expressed in thousands of Canadian dollars

EXHIBIT 2.24C Cineplex Inc.’s 2016 Consolidated Statements of Operations

EXHIBIT 2.24D Cineplex Inc.’s 2016 Consolidated Statements of Changes in Equity

EXHIBIT 2.24E Excerpt from Cineplex Inc.’s 2016 Annual Report

Required

a. Determine the amount of dividends declared during fiscal 2016. Where did you find this information?

b. How does the declaration of dividends affect the accounting equation?

c. Determine the amount of dividends paid during fiscal 2016. Where did you find this information?

d. How does the payment of dividends affect the accounting equation?

e. Given Cineplex Inc.’s cost of food service of $96,059 in 2016 and $90,530 in 2015, determine the gross margin on concession sales for the two years. Explain the results of your gross margin calculations.

f. What was Cineplex’s cash fl ow pattern in 2016? Did it fit the “normal” pattern discussed in the chapter?

g. Refer to Cineplex Inc.’s “Other Costs” note 21. What are the largest two expenses? Why would these costs be expected in this line of business?

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December 31, 2015 December 31, 2016 Assets Current assets S 33,553 Cash and cash equivalents (note 3) 35,713 Trade and other receivables (note 4) 115,903 121,398 Income taxes receivable (note 7) 463 Inventories (note 5) 21,412 19,691 Prepaid expenses and other current assets 10,856 10,025 182,187 186,827 Non-current assets Property, equipment and leaseholds (note 6) 564,879 533,192 Deferred income taxes (note 7) 6,517 5,891 Fair value of interest rate swap agreements (note 29) 756 Interests in joint ventures (note 8) 35,487 35,288 Intangible assets (note 9) 132,140 125,492 Goodwill (note 10) 813,494 807,953 $1,728,186 $1,701,917 Liabilities Current liabilities S 204,725 $ 209,657 Accounts payable and accrued liabilities (note 11) Share-based compensation (note 12) 8,958 9,742 Dividends payable (note 13) 8,575 8,238 Income taxes payable (note 7) 2,042 30,464 Deferred revenue 159,568 172,140 Current debt (note 14) 3,737 Finance lease obligations (note 15) 3,180 2,957 Fair value of interest rate swap agreements (note 29) 2,419 1,414 425,777 402,039 Non-current liabilities Share-based compensation (note 12) 18,346 18,907 Long-term debt (note 14) 297,496 222,340 Fair value of interest rate swap agreements (note 29) 4,188 2,020 Finance lease obligations (note 15) 8,871 12,052 Post-employment benefit obligations (note 16) 7,932 7,296 Other liabilities (note 17) 125,560 131,874 Deferred income taxes (note 7) 6,283 11,210 Convertible debentures (note 18) 102,817 100,703 574,252 503,643 Total liabilities 976,291 929,420 December 31, December 31, 2016 2015 Equity Share capital (note 19) 859,351 858,305 Deficit (108,342) (86,296) Hedging reserves and other (3,170) (4,979) Contributed surplus 81 (491) Cumulative translation adjustment 1,175 934 Total equity attributable to owners of Cineplex 749,095 767,473 Non-controlling interests 2,800 5,024 Total equity 751,895 772,497 $1,728,186 $1,701,917