CELTICS Boston Celtics Limited Partnership II and Subsidiaries presented these

| June 5, 2016

Question
Case 4-5 CELTICS
Boston Celtics Limited Partnership II and Subsidiaries presented these consolidated statements of income for 1998, 1997, and 1996.

boston celtics limited partnership ii and subsidiaries consolidated statements of income for the year ended june 30, 1998 june 30, 1997 june 30, 1996 revenues: basketball regular season $39,107,960 $31,813,019 $35,249,625 ticket sales 28,002,469 23,269,159 22,071,992 television and radio broadcast rights fees 8,569,485 7,915,626 7,458,651 other, principally promotional advertising 75,679,914 62,997,804 64,780,268 costs and expenses: basketball regular season team 40,401,643 40,941,156 27,891,264 game 2,820,107 2,386,042 2,606,218 general and administrative 13,464,566 13,913,893 15,053,333 selling and promotional 4,819,478 4,680,168 2,973,488 depreciation 208,162 189,324 140,894 amortization of nba franchise and other intangible assets 165,035 164,702 164,703 61,878,991 62,275,285 48,829,900 13,800,923 722,519 15,950,368 interest expense (6,017,737) (5,872,805) (6,387,598) interest income 6,402,366 6,609,541 8,175,184 net realized gains (losses) on disposition of marketable securities and other short-term investments (18,235) 361,051 (101,138) income from continuing operations before income taxes 14,167,317 1,820,306 17,636,816 provision for income taxes 1,900,000 1,400,000 1,850,000 income from continuing operations 12,267,317 420,306 15,786,816 discontinued operations: income from discontinued operations (less applicable income taxes of $30,000) 82,806 gain from disposal of discontinued operations (less applicable income taxes of $17,770,000) 38,330,907 net income 12,267,317 420,306 54,200,529 net income applicable to interests of general partners 306,216 62,246 1,291,014 net income applicable to interests of limited partners $11,961,101 $ 358,060 $52,909,515 per unit: income from continuing operations—basic $2
Required

a. Comment on Amortization of NBA Franchise and Other Intangible Assets.
b. Would the discontinued operations be included in projecting the future? Comment.
c. The costs and expenses include team costs and expenses. Speculate on the major reason for the increase in this expense between 1996 and 1997.
d. What were the major reasons for the increase in income from continuing operations between 1997 and 1998?
e. Speculate on why distributions declared were higher in 1998 than 1996. (Notice that net income was substantially higher in 1996.)
174175

Provided substantive comments and support for discussion of the Amortization of NBA Franchise and Other Intangible Assets.

Provided decision and substantive comments and support for discussion of using discontinued operations to project the future.

Provided substantive comments and support for discussion of the major reasons for the increase in team costs and expenses.

Provided substantive comments and support for discussion of the major reasons for the increase in income from continuing operations.

Provided substantive comments and support for discussion of the increase in distributions.

Used appropriate and professional grammar, punctuation, and communication style.

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