Fundamentals of Advanced Accounting 5th Edition by Joe Ben Hoyle,Thomas Schaefer,Timothy Doupnik

Exercise 10

Granger Eagles Players' Association and Mr. Doublecount, the CEO of Granger Eagles Baseball Company, ask your help in resolving a salary dispute. Mr. Doublecount presents the following income statement to the player representatives.

Mr. Doublecount argues that the Granger Eagles really lose money and, until things turn around, a salary increase is out of the question.
As a result of your inquiry, you discover that Granger Eagles Baseball Company owns 91 percent of the voting stock in Eagle Stadium, Inc. This venue is specifically designed for baseball and is where the Eagles play their entire home game schedule. However, Mr. Doublecount does not wish to consider the profits of Eagle Stadium in the negotiations with the players. He claims that "the stadium is really a separate business entity that was purchased separately from the team" and therefore does not concern the players. The Eagles Stadium income statement appears as follows:

Required
1. What advice would you provide the negotiating parties regarding the issue of considering the
Eagles Stadium income statement in their discussions What authoritative literature could you cite in supporting your advice
2. What other pertinent information would you need to provide a specific recommendation regarding players' salaries