The Chosen One: The Digital Distribution Dilemma at Fitz Games - Teaching Note

Learning Objective

This case was designed as a vehicle for practice in recording financial transactions relating to both finance and operating leases, with an emphasis on finance leases. Based on criteria discussed in class, students are required to identify whether each lease in the case is an operating lease or a finance lease. Students must then account for all entries related to both finance and operating lease transactions. Specifically, they must perform a) present value finance lease obligations to record the initial transaction; and b) account for amortization, interest expense and cash payments relating to leases. The case also provides students with practice accounting for prepayments, payables revenue and expenses.