Overview
Instructions
Respond to the following prompts. Please type using a word processing program and turn in the final copy on Canvas. Write as much or as little as you feel necessary to answer each question to the best of your ability. You may use all available resources to complete this case – e.g., lecture slides, notes, your book, and the Accounting Standards Codification. Collaboration with others in your group is vital. How you work together is up to you – however, I encourage everyone in the group to take at least some part for both articles. Please turn in only one finished assignment for each group online. You will be assigned to a group for this minicase. Consider each prompt separately.
For grading, I will focus primarily on the analysis and communication that you provide. There is not necessarily a “right answer” that I will be looking for and I will not grade based on that your opinion, as long as it is well-justified and communicated. Instead, I want to be able to follow your own accounting and ethical decision-making clearly and to be able to not just understand what your decision(s) should be, but also why you feel that they are best, considering the impact on ALL the entity’s stakeholders, including yourself.
1)Cite the ASC down to the Paragraph. For example, (ASC 330-10-05-01)
2)Interpret the codification paragraph into ‘plain English’ as best you can. In other words, how would you explain the appropriate accounting treatment to a colleague, boss, or business partner who has a basic understanding of accounting? You may (and are encouraged to) use debits and credits or t-accounts to illustrate the accounting if appropriate.
3)Include a bibliography or works cited page in MLA or APA format. Please refer to https://englishcomposition.org/advanced-writing/mla-how-to-format-a-works-cited-page/ (as an example for MLA format). Points will be taken off if the bibliography is not correctly formatted. Sample bibliographies are provided on Canvas.
4)Formal writing is expected – do not restate the question when answering but title which question you are answering (for example: Part 1 then proceed with your response following that “title” in paragraph format). Bullet points are not an acceptable format.
5)There is no page length minimum or maximum but each question needs to be answered thoroughly.
6)All submissions with be run through Turnitin.com automatically when you submit. AI is not a replacement for your own work. Any work that looks remotely written by AI or plagiarized without appropriate citations will be sent to academic integrity and the entire team will earn a 0 for the entire assignment.
Part 1 (30 points)
Glitter And Greed: The Lisa Frank Story Paints A Dark Portrait Of The Beloved Kids’ Brand
(below are some excerpts)
By: Rachel Brodsky, December 5, 2024 (Time Magazine Article)
“If you grew up in the 1980s or '90s, it's very likely that you came of age with Lisa Frank-branded school supplies, party favors, stickers, beach towels, and all manner of rainbow-splashed products. The company, which at one point brought in an estimated $66 million, was immediately recognizable for its bright pops of color and cuddly, big-eyed animal characters, with fantastical illustrations featuring dolphins, unicorns, puppies, and kittens……
Who is Lisa Frank?
Behind the multicolored, whimsical designs is a real person: The titular artist graduated from the Cranbrook Kingswood School in Bloomfield Hills, Michigan, in 1972 and later attended the University of Arizona, where she studied art. Also in the 1970s, when she was in her mid-20s, Frank founded the children's jewelry company Sticky Fingers. Later, Sticky Fingers became Lisa Frank Inc. and jumped on the burgeoning 1980s sticker collecting craze………..
After the ‘80s sticker collecting trend wore down, Lisa Frank, Inc. began to place a focus on the back-to-school market, placing their characters and designs on folders, trapper keepers, pens, pencils, and stationery. By the 1990s, Lisa Frank, Inc. landed deals with big box retailers like WalMart and Target…..
Licensing controversies and lawsuits
By the mid 2010s, LFI had ceased manufacturing (the factory closed in 2013), though they were still licensing out the art to other producers. In 2016, a small, New Jersey-based vegan makeup company called Glamour Dolls reached out to LFI to do a collaboration; the two companies signed a licensing agreement and launched a Kickstarter campaign, which immediately went viral. Even though LFI was no longer manufacturing, the 2010s saw a massive wave of ‘90s nostalgia, which Glamour Dolls planned on leaning into.
Glamour Dolls’ two co-founders, Peter Georgotas and Jessica Romano, spoke to filmmakers about how the deal ultimately ruined their reputations and company, with Romano eventually having to file for bankruptcy.
Initially, everything seemed great between the two brands. Frank herself joined Romano and Georgotas at Kickstarter’s headquarters. However, Romano said “the tone changed” as soon as she started showing Frank some decorative ideas for a leopard-print makeup brush. From then on, Frank allegedly demanded that she only be in touch with Georgotas.
Upon launching the Kickstarter campaign, Glamour Dolls hired influencer Kandee Johnson to announce the collaboration, which was set to feature products like an eyeshadow palette trapper keeper and unicorn-top nail polishes.
Because campaign donors were promised a certain timeline delivery, Georgotas and Romano wanted to start producing products ASAP in order to get orders out. But they claimed to filmmakers that Frank micromanaged every aspect of the process, to the point where customers started to complain and harass Romano, who was the face of Glamour Dolls. "We felt like if we didn't do what Lisa wanted, we were going to lose everything," Georgotas said.
Meanwhile, Romano theorized to the filmmakers that Frank might have been dragging her feet on production so that they'd have to renew the licensing agreement, the terms of which she changed “significantly.” "We kept finding money to give to her, but we were eating cereal for dinner," Romano said.
In the end, LFI terminated the contract and denied stonewalling Glamour Dolls. LFI also sent emails to the Kickstarter backers blaming Glamour Dolls for the production delays.
In 2020, the makeup brand Morphe launched a collab with LFI using what appeared to be the original product designs ideated by Glamour Dolls, who filed a lawsuit in federal court for breach of contract, defamation, and fraud.
Frank filed a counterclaim, alleging repeated breaches of its licensing agreement with LFI. Frank also alleged that Glamour Dolls’ updates to Kickstarter backers resulted in customers believing that LFI had defrauded or cheated them.…..”
(Link to full article: https://time.com/7199874/lisa-frank-documentary-true-story/)
Answer this questions:
1.Is there any authoritative guidelines on how to recognize licensing deals from the perspective of Lisa Frank, Inc. (LFI) and Glamour Dolls? If so, how do they recognize this in their respective financial statements? Cite any helpful ASCs from the FASB to make your conclusions clear.