Spirited News & Observations II -- NGE/Baxter

[Captain Chaos]

You may add this post to your own list of failures to look more mature than everyone else.

Or you can add that wanna be member to your ignore list and not be subjected to immaturity and brain cell killing nonsense

 

[alissafalco]

I see the jealously is still strong with several. I also see that Jenn is still posting at the blog. Haha. Guess the attempts to get her fired fell flat... but maybe she got a raise instead. Poor '74... another failure to add to his (growing) list.

Go away troll.

 

[Snowflake82]

Upselling does work. I worked at a movie theatre as a concessionist when the first of the Keaton, Batman movies came out.

For a minute there, you had me thinking Buster Keaton. Then my brain started working again.

 

[Funmeister]

About as silly as insinuating that you have to charge a room rate for anti-fraud purposes I suppose.

Lol right....right....You know how it works. lol

 

[MattM]

Lol right....right....You know how it works. lol

I'm starting to think maybe you're first year B School. It's the only logical explanation. And it's OK. You're not supposed to know it all in college. You're just supposed to think you do.

Side note: you've hit your allowable quota on "lol" for all of 2013 today.

 

[englanddg]

I'm starting to think maybe you're first year B School. It's the only logical explanation. And it's OK. You're not supposed to know it all in college. You're just supposed to think you do.

Side note: you've hit your allowable quota on "lol" for all of 2013 today.

I'm guessing never managed books for a business of any import.

Accounting is supposed to be black and white, but it's the most gray area I've ever seen in any business.

 

[GoofGoof]

I can't believe an accounting debate has broken out. Luckily our spirited friend is away on his "spring break". I don't think he would approve

Since I am an accountant and I know a thing or 2 about inter-company transactions I can add in my 2 cents on the issue. There are certain companies where inter-company transactions are required to be at arms length and recorded as if they are 3rd party sales. For example, if a company has 2 wholly owned subsidiaries but 1 or both have their own stand alone debt then sales between the subsidiaries need to be recorded as arms length transactions as revenue on one side and expense on the other. Another example could be a subsidiary operating in a regulated market like a utility. In these cases the accounting rules are pretty strict with how to record these transactions. In the Disney example you are talking about an inter-company charge between 2 departments of the same entity. In this case the transfer is an internal measurement and would be eliminated in consolidation for the company. WDW marketing would be charged some predetermined rate by the hotel where the free rooms are offered. The hotel would record revenue and the marketing department would record expense. In consolidation the revenue and expense would be eliminated.

As far as the economics go there would technically be no lost revenues if the room was going to be empty anyway. There would be limited additional expense for things like cleaning the room and supplies. However, as someone else pointed out there is an opportunity cost. First you can't know for sure the room would not get rented when you chose to give it away. Thats the opportunity cost. Even if you could know the room wouldn't get rented there is another opportunity cost. Would any of these people have gone to WDW and paid for their trip if they couldn't get a free one? I am assuming if they are huge fans since they have dedicated sites and most probably went and paid out of pocket before they started getting free offers. WDW is losing the potential revenue from these guests.

 

[englanddg]

I can't believe an accounting debate has broken out. Luckily our spirited friend is away on his "spring break". I don't think he would approve

Since I am an accountant and I know a thing or 2 about inter-company transactions I can add in my 2 cents on the issue. There are certain companies where inter-company transactions are required to be at arms length and recorded as if they are 3rd party sales. For example, if a company has 2 wholly owned subsidiaries but 1 or both have their own stand alone debt then sales between the subsidiaries need to be recorded as arms length transactions as revenue on one side and expense on the other. Another example could be a subsidiary operating in a regulated market like a utility. In these cases the accounting rules are pretty strict with how to record these transactions. In the Disney example you are talking about an inter-company charge between 2 departments of the same entity. In this case the transfer is an internal measurement and would be eliminated in consolidation for the company. WDW marketing would be charged some predetermined rate by the hotel where the free rooms are offered. The hotel would record revenue and the marketing department would record expense. In consolidation the revenue and expense would be eliminated.

As far as the economics go there would technically be no lost revenues if the room was going to be empty anyway. There would be limited additional expense for things like cleaning the room and supplies. However, as someone else pointed out there is an opportunity cost. First you can't know for sure the room would not get rented when you chose to give it away. Thats the opportunity cost. Even if you could know the room wouldn't get rented there is another opportunity cost. Would any of these people have gone to WDW and paid for their trip if they couldn't get a free one? I am assuming if they are huge fans since they have dedicated sites and most probably went and paid out of pocket before they started getting free offers. WDW is losing the potential revenue from these guests.

Extremely well put. And, interco is my biggest headache.

I am not an accountant, just IT, but I get to deal with accountants all day long and I also control our comptroller and internal processes...I've been fighting with the accountant for months about a 350k write off he wants to do to income, and it's just not there. We balance externally. After months of fighting, he finally found the entry he made that tossed us out of balance yesterday.

Months of stress...over nothing. But, my point is that with interco, it's quite easy to make a mistake, especially since most interco transactions are not thought through by those who order them (marketing depts, etc.)...they just want to generate sales.

 

[GoofGoof]

Extremely well put. And, interco is my biggest headache.

I am not an accountant, just IT, but I get to deal with accountants all day long and I also control our comptroller and internal processes...I've been fighting with the accountant for months about a 350k write off he wants to do to income, and it's just not there. We balance externally. After months of fighting, he finally found the entry he made that tossed us out of balance yesterday.

Months of stress...over nothing. But, my point is that with interco, it's quite easy to make a mistake, especially since most interco transactions are not thought through by those who order them (marketing depts, etc.)...they just want to generate sales.

So true. The best part is most external auditors and readers of financial statements could care less about intercompany stuff since it all nets to zero, but sometimes we spend more time looking into intercompany problems than actual things that matter.

I spend a lot of time "bothering" my IT guys every day.

 

[englanddg]

So true. The best part is most external auditors and readers of financial statements could care less about intercompany stuff since it all nets to zero, but sometimes we spend more time looking into intercompany problems than actual things that matter.

I spend a lot of time "bothering" my IT guys every day.

Essentially, the accountant and I are on the same page...but when he starts making huge correction entries, and then deciding that those entries needed to be backed out (as the import process I wrote was correct)...and then he doesn't back them out properly...

Frustration ensues.

And, unfortunantly, sales based management (which is most management) wants an answer immediately, and doesn't like the term "audit"...which takes time, but will ultimately find the issue.

 

[Clever Name]

The original funk soul brotha.

Bell and his boys had a great sense of humor. This is from 1881 on an Edison Graphophone at the Volta Lab:

 

[Tim_4]

I can't believe an accounting debate has broken out. Luckily our spirited friend is away on his "spring break". I don't think he would approve

Since I am an accountant and I know a thing or 2 about inter-company transactions I can add in my 2 cents on the issue. There are certain companies where inter-company transactions are required to be at arms length and recorded as if they are 3rd party sales. For example, if a company has 2 wholly owned subsidiaries but 1 or both have their own stand alone debt then sales between the subsidiaries need to be recorded as arms length transactions as revenue on one side and expense on the other. Another example could be a subsidiary operating in a regulated market like a utility. In these cases the accounting rules are pretty strict with how to record these transactions. In the Disney example you are talking about an inter-company charge between 2 departments of the same entity. In this case the transfer is an internal measurement and would be eliminated in consolidation for the company. WDW marketing would be charged some predetermined rate by the hotel where the free rooms are offered. The hotel would record revenue and the marketing department would record expense. In consolidation the revenue and expense would be eliminated.

As far as the economics go there would technically be no lost revenues if the room was going to be empty anyway. There would be limited additional expense for things like cleaning the room and supplies. However, as someone else pointed out there is an opportunity cost. First you can't know for sure the room would not get rented when you chose to give it away. Thats the opportunity cost. Even if you could know the room wouldn't get rented there is another opportunity cost. Would any of these people have gone to WDW and paid for their trip if they couldn't get a free one? I am assuming if they are huge fans since they have dedicated sites and most probably went and paid out of pocket before they started getting free offers. WDW is losing the potential revenue from these guests.

God bless you and your articulation of this. Trying to type out journal entries on my phone earlier was hell. I was waiting until I got to my computer to bang out a more detailed explanation but now I don't have to.

 

[Tim_4]

Extremely well put. And, interco is my biggest headache.

I am not an accountant, just IT, but I get to deal with accountants all day long and I also control our comptroller and internal processes...I've been fighting with the accountant for months about a 350k write off he wants to do to income, and it's just not there. We balance externally. After months of fighting, he finally found the entry he made that tossed us out of balance yesterday.

Months of stress...over nothing. But, my point is that with interco, it's quite easy to make a mistake, especially since most interco transactions are not thought through by those who order them (marketing depts, etc.)...they just want to generate sales.

Happens all the time. The most common ones I see are internal service departments that are supposed to bill internally at a reduced rate but they don't like what that does to their margins. They bill at the third party rate and blow the client department's forecast through the roof.

 

[Cosmic Commando]

It can be better than that... remember corporatations pay taxes on profits... not revenue. There be the twist

There are also lots of motivations that are not directly monetary - but are still selfish (in they are self-serving to the business)

Without looking it up, I'm sure somebody like a McDonald's donates money to healthy eating initiatives and nutrition research to limit damages in future "Big Food" lawsuits. It's the same reason Iger has said that Disney characters are going to stop appearing on packaging for unhealthy food and no junk food ads during children's TV.


Also, if we're going to have a swordfight over the exciting world of corporate accounting, can we stop using inter- when we really mean intra-?

 

[the.dreamfinder]

Fun fact: HKDL has no FastPass. Don't tell Staggs…

 

[Snowflake82]

Also, if we're going to have a swordfight over the exciting world of corporate accounting, can we stop using inter- when we really mean intra-?

In accounting, the term used is "intercompany" as in between two different companies that are both subsidiaries of the same corporation, also typically used even when doing entries between 2 divisions that are not legally separate subs. I have never heard an accountant talk about "intra-company" entries.

 

[GoofGoof]

Also, if we're going to have a swordfight over the exciting world of corporate accounting, can we stop using inter- when we really mean intra-?

Haha. You are technically probably correct. An intercompany transaction is between two seperate legal entities that are subsidiaries of the same parent company while an intracompany transaction is between two departments or divisions of the same legal entity. If the marketing department giving away the rooms and the hotel are both departments under the same legal entity then it would technically be intracompany. I have no clue if that's the case or not. In my experience, in practice most people use the term intercompany for both intracompany and intercompany transactions, but you are correct that there is a technical difference.

 

[Goofyernmost]

I can't believe an accounting debate has broken out. Luckily our spirited friend is away on his "spring break". I don't think he would approve

Since I am an accountant and I know a thing or 2 about inter-company transactions I can add in my 2 cents on the issue. There are certain companies where inter-company transactions are required to be at arms length and recorded as if they are 3rd party sales. For example, if a company has 2 wholly owned subsidiaries but 1 or both have their own stand alone debt then sales between the subsidiaries need to be recorded as arms length transactions as revenue on one side and expense on the other. Another example could be a subsidiary operating in a regulated market like a utility. In these cases the accounting rules are pretty strict with how to record these transactions. In the Disney example you are talking about an inter-company charge between 2 departments of the same entity. In this case the transfer is an internal measurement and would be eliminated in consolidation for the company. WDW marketing would be charged some predetermined rate by the hotel where the free rooms are offered. The hotel would record revenue and the marketing department would record expense. In consolidation the revenue and expense would be eliminated.

As far as the economics go there would technically be no lost revenues if the room was going to be empty anyway. There would be limited additional expense for things like cleaning the room and supplies. However, as someone else pointed out there is an opportunity cost. First you can't know for sure the room would not get rented when you chose to give it away. Thats the opportunity cost. Even if you could know the room wouldn't get rented there is another opportunity cost. Would any of these people have gone to WDW and paid for their trip if they couldn't get a free one? I am assuming if they are huge fans since they have dedicated sites and most probably went and paid out of pocket before they started getting free offers. WDW is losing the potential revenue from these guests.

That's pretty much what I was trying to state as accounting practices. However it is done, which is usually whatever way is most beneficial to the company, it doesn't change the fact that it isn't real money. Opportunity costs are really a fancy name for gamble. They know their history and have calculated that the chances are good that those spaces would have been empty to begin with. In the hotel industry it is a rare occasion when they have an actual 100% occupancy.

Looking at it like a company is a person, if you take $100.00 out of your right pocket and put it in your left pocket...have you lost any of that money? If a company exaggerates the switches and on paper says that they transferred $110.00 does that make it any different? You started out with $100.00 and you still have $100.00 just in a different location. Does that have an effect on specific cost centers? Yes, it does. Has it altered, in anyway, the bottom line, company wise? Nope! Still have the $100.00 that they started with.

 

[GoofGoof]

To get back on topic, what's everyone looking more forward to? Antarctica, transformers or MK open 24 hours? One of these 3 is not like the others.

For me personally it's Antarctica. I could watch those little guys all day long when it was just a simple exhibit. Now, more penguins and a whole new ride system. The videos and concept art I've seen look amazing. I'm sure Transformers will be pretty solid too. Meanwhile over at MK they will be keeping the park open 24hrs...again. If they keep doing this once a year doesn't the novelty wear off eventually? I thought the big draw was it was a once in a lifetime type thing.

Is anyone who is local planning to do all 3 in the same day? Assuming Transformers opens the same weekend (which I think is only a rumor at this point).

 

[RobBlock]

Fun fact: HKDL has no FastPass. Don't tell Staggs…

Sorry to burst your bubble, but HKDL had fastpass on several attractions when I was there in January.