NBC paid $401 million for the rights to televise the 1992 Summer Olympic Games, and it was widely reported that it had a loss of more than $60 million. CBS purchased the rights to the 1992 and 1994 Winter Olympic Games for a combined $543 million. CBS reported a $322 million pretax loss on its baseball and football contracts in 1991. 1. Under what conditions, if any, should NBC and CBS have written down the value of their assets?
NBC paid $401 million for the rights to televise the 1992 Summer Olympic Games, and it was widely reported that it had a loss of more than $60 million. CBS purchased the rights to the 1992 and 1994 Winter Olympic Games for a combined $543 million. CBS reported a $322 million pretax loss on its baseball and football contracts in 1991. 1. Under what conditions, if any, should NBC and CBS have written down the value of their assets?
Chapter25: Taxation Of International Transact Ions
Section: Chapter Questions
Problem 25P
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NBC paid $401 million for the rights to televise the 1992 Summer Olympic Games, and it was widely reported that it had a loss of more than $60 million.
CBS purchased the rights to the 1992 and 1994 Winter Olympic Games for a combined $543 million. CBS reported a $322 million pretax loss on its baseball and football contracts in 1991.
1. Under what conditions, if any, should NBC and CBS have written down the value of their assets?
2. Does this situation allow opportunities for earnings management?
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