Kansas City Table Template
Essay by Lakeisa Andrews • November 18, 2015 • Coursework • 903 Words (4 Pages) • 1,182 Views
Lakeisa Andrews
MBE503 Accounting and Ethics
Ms. Michele Jurgens
Measurement Positions | Roster Depreciation | Measurement Issues Player Compensation | Stadium Expense |
1. Owners’ Accounting | 50% of $228 million purchase price with depreciating it for 6 years with an amount to $19,000 a year | Roster salary will include a deferred salary | Two sole owners with other owners that deal with other corporations to benefit them |
2. Players’ Accounting | Believe no depreciation until a team is sold | Believe that deferred salary is not expensed until it is given during that year. | Believe they should be 80% of current owner’s expenses |
3. Economic Truth | Player rosters baseball clubs’ valuable assets - appreciate and depreciate over time. With injuries and retirements will cause contracts to decrease. | Deferred compensation expensed at the time of earned; capitalized and amortized bonuses during the contract timing; and development of reserve equal to possible loss | An arms-length market price. |
4. GAAP Accounting |
Summary:
There are five points that sit between the players and owners when dealing with the accounting perspective of the Kansa City Zephyrs Baseball team. The four main differences appear in roster depreciation, current roster salary, amortization of signing bonuses, non-roster guaranteed contract expense, and stadium operations. After analyzing these points below I have decided to side with the owners.
Owners take 50% of purchase price of $228 million and depreciate it for 6 years this amounts to $19,000 a year in depreciation. While players on the other hand believe there should be no depreciation until the team is sold. They also believe that depreciation isn’t valid because players tend to improve their skills through time and therefore would increase roster value not decrease it. In my opinion I would have to side with the owners on this because generally many firms use straight line depreciation and its fairly common for depreciation to be done that way. Depreciation expenses are typically calculated at (total acquisition cost – salvage value)/useful life. It is possible that there could be no useful life or salvage value if other owners do not buy it and therefore depreciation should still remain as the owners have calculated. I also would like to note that not all players get better over time because of age, or recurring injuries so I believe that the teams do not increase roster value. In fact, I believe in the long run teams stay fairly the same with regards to performance sometimes they have bad years and sometimes really good years that leave off to an average team performance.
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