Kansas City
Autor: ldiaz3013 • August 16, 2015 • Essay • 378 Words (2 Pages) • 1,445 Views
Laura Diaz
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?
- Roster Depreciation
In this case, the players are right. The players believe that depreciation is not required because players improve their skills through their years of experience and they believe the roster appreciates through the years. The appreciation and depreciation of the player rosters are based on the player’s talent, good scouting and coaching which will increase the value of the roster. On the other hand, injuries, retirement and poor performance will decrease the value of the roster. In this case, the organization will make changes to the roster such as trades to increase the value which is why the roster should not be depreciated.
- Deferred Salary
In this case, the owners are right. Players believe that deferred compensation expenditure should be expensed when the cash is exhausted. However, deferred compensation should be expensed when it is earned.
- Signing Bonuses
In this case, the players are right. Players suggest that signing bonuses should be paid during the years of the contract. The owners pay these sign on bonuses and consider them as an expense for that year. In my opinion, these bonuses should be amortized because they are expected to deliver benefits over the lives of their contracts.
- Non-roster Guaranteed Contract Expenses
The players suggest that payments should be expensed as they are made and the owners believe that the total future value of the payments should be expensed when a player is removed from the roster. I believe that the players are correct because the organization should take into account the expected loss from non-roster guaranteed contract expenses due to their choice to release a player from their contract.
- Stadium Cost
The owners believe that two of the five owners are partial owners and the players believe that these two owners are the only owners and are overcharging for the rent of the stadium. They also suggest that the stadium rents understate profits and move profits to the corporation that is owned by the two owners. I believe that in this case, an arm’s length market price should be used which is the price at which two parties would agree to a transaction.
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