RE: Sony’s Goodwill and Segment Reporting
Sony have been known worldwide as a Japanese multinational company, its efforts trying to expanding business in United States, have made that Sony acquires CBS Records and Columbia Pictures. Thus, creating Sony Music and Sony Pictures, which represent Sony entertainment. This involved to the company in $1.2 billion of debt, and assigned goodwill assets for $3.8 billion. The last filing with SEC reported just two main segments: electronics and entertainment. The results of these segments, have brought profitability in Sony music and continuous losses in Sony Pictures. Its projections calculated loss for five years in the entertainment pictures, considering that it would become profitable. Due to this, Sony has experienced in the last four years losses, which are related after amortization and financing costs. But also, currently Sony Pictures has experienced losses of almost $1 billion. Sony admitted that 2.7 billion in goodwill assets were written down related to Sony Pictures acquisitions. Sony has shown low profit in Entertainment, as result of combined operation business between Sony Music and Sony Pictures. Thus, the financial statement consolidation did not disclose any losses from Sony Pictures.
Considering the statement above, I would present the following issues: 1-Recently business acquisitions of Sony, which involves Goodwill considered intangible asset. Considering the above statement the first issue would be determines whether goodwill amortization or impairment testing would be necessary.
2- Also Sony combined operations between Sony music and Sony Pictures, which represent Sony Entertainment. The figures shown in its financial statement consolidation does not represent the reality of the company. The second issue to considerer is determines whether financial statement disclosures of Sony Entertainment were adequate under regulatory rules.
1-As stated by...
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