Abstract High-technology enterprises present a variety of accounting and auditing issues. Rapid technological developments make realizability of assets and viability of companies difficult to assess. The frequent use of joint ventures raises issues regarding control and consolidation. Accounting standards do not always give clear guidance. InterActive, Inc., a developer and marketer of interactive television programming and technology, is about to go public even though there is no proven market for the company's products. Students, acting as the company's auditors, must resolve such accounting and auditing issues as the desirability of a going concern opinion, capitalization of software and intangible assets, and a dispute with the SEC staff. This case is designed for use in a "capstone" accounting or auditing course. The difficulty level may be modified. Students must use relevant technical literature and suggest appropriate solutions to problems that are not clear-cut, building an appreciation of the role of judgment in accounting.
Eckstein et al. (Sat,) studied this question.