1.0 Introduction Armco Inc. is a steel manufacturer that used to be the sixth largest in its industry in US (in 1990). The Kansas City Works within its Midwestern Steel Division was hit by the decline in the business in the US steel industry despite its good performance in the past. Consequently, it downsized and incurred significant losses in most of the 1980s. This entity produces two primary products including grinding media and carbon wire rod, one being recognized in the industry for its durability
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Katelynn Tax 1/18/16 Kansas City Zephyrs Baseball Club, Inc. 2006 There are five main points of difference between the accounting methods of players and owners. The five main differences appear in roster depreciation, current roster salary, amortization of signing bonuses, non-roster guaranteed contract expense, and stadium operations. The following paragraphs analysis the main points above. Owners take 50% of purchase price of $228 million and depreciate it for 6 years this amounts to $19,000
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KANSAS CITY ZEPHYRS BASEBALL CLUB Amortization of signing bonuses: Owners: They have considered “signing bonus” as an expense in the year they are paid (=$12540) Players: Think that signing bonuses are part of the compensation package and for accounting purpose the bonuses should be spread over the term of the player’s contract (=$7818) Our opinion: Agree with the player’s view that signing bonuses have to be capitalized and amortized over the lives of the contracts. This is because players are
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towards the building of a new ballpark in your area. Within ten minutes of my house in Kansas City, Kansas we have had two stadiums built within the last 12 years, Sporting KC Park (MLS) and Community America Ballpark (minor league baseball). Sporting KC park was built using STAR bonds (only available in Kansas and Nevada) and according to the Kansas Department of Commerce, sales tax revenue (STAR) bonds provide Kansas municipalities the opportunity to issue bonds to finance the development of major commercial
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do you think is correct about the true profitability of Kansas City Zephyrs – the owners or the players? a. both are correct on different issues and there is one issue that is undecided because the facts are not there 2. What is your recommendation regarding the particular accounting disagreements between the owners and the players? b. see below 3. Looking ahead to the sale of the luxury boxes, how should the Kansas City Zephyrs Baseball Club account for the up front $250,000
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Kansas City Zephyrs There are 5 items of dispute between the owners and the players. These items are : 1. Roster depreciation 2. Current roster salary 3. Amortization of signing bonuses 4. Non-roster guaranteed contract expense 5. Stadium operations The owners claim that they are making losses in the financial years 2004- 2005 whereas players are calming that owners are using accounting tools to hide profits thereby depriving players of their rightful amount in compensation and other
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Refer to the Kansas City Zephyrs reading from earlier in the week. For each of the 5 areas in dispute, answer the following: Who is right? Why? 1. Roster Depreciation The players are right. All players believe that depreciation is not required because the players improve their skills through their years of experience. Also, they believe the roster appreciates through the years. The appreciation and depreciation of the player rosters are based on the player’s talent, scouting, and coaching
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Introduction and Background This case shows different aspects relating to accounting and how they can create an atmosphere of controversy. The problem arises since the owners of baseball team and the players associations are negotiating the collective agreements, with the result of these negotiations both parts could measure how profitable it can be the business of baseball itself. The case describes five areas in which accounting are in dispute: 1. Roster Depreciation 2. Current Roster Salary
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In the case study of the Kansas City Zephyrs Baseball Club, Inc. Bill Ahern the arbitrator was assigned to resolve the issue on the parties’ agreeing on the true profitability of the major league baseball teams. Both Zephyr’s owners and players disagree on three different areas: a) Roster depreciation, b) Overstated Player Salary Expense which entails current signing bonuses, roster salary, amortization of and non-roster guaranteed contract expense; and c) Related-Party Transactions (Stadium Operations)
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Kansas City Zephyrs Case This case is a good example of the “earnings game”. A dispute arose between the baseball team owners and the players association on the true profitability of the baseball business. The case describes 3 main areas for which the accounting is being disputed: * Roster depreciation * Player compensation * Current Roster Salary - Deferred Compensation * Amortization of Signing Bonuses * Non-Roster Guaranteed Roster Expense * Transfer pricing
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