periodic net income numbers if the clubs can always be sold for huge profits? How should Bill Ahern resolve the accounting conflict between the owners and players? How much did the Kansas City Zephyrs Baseball Club earn in 1983 and 1984? Facts This case shows that how different accounting methods can lead a company to different positions. That is what Bill Ahern was selected on April 9 to focus on reviewing the finances of the Kansas City Zephyrs Baseball Club‚ Inc.‚ which was bought on November
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Kansas City Zephyrs Baseball Club‚ Inc Analysis of the Kansas City Zephyrs Baseball Club for 1983 and 1984. In reviewing the Kansas City Zephyrs Baseball Club‚ and hearing arguments from both the owners and player there have been some interesting findings. We see that both parties are motivated towards getting more actual cash flow for their respective sides. Using different accounting techniques resulted in two very different financial statements for the Kansas City Zephyrs Baseball Club.
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Parties Involved: Players; Professional Baseball Players Association (PBPA) Owners; Owner-Player Committee (OPC) Bill Ahern; Arbitrator CONFLICT: Players feel that they should share in the teams’ profits will be biased towards accounting that yields higher net profits so that they may argue for a stake in the profits feel that the owners are hiding their profits through accounting tricks Owners contend that the teams are actually losing money each year will be biased towards accounting
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KANSAS CITY ZEPHYRS BASEBALL CLUB‚ INC. There are several accounting conflicts that are to be addressed between the owners and the players. These issues all have to do with the profitability of the Kansas City Zephyrs. It would seem‚ based on the evidence presented by both sides‚ that the owners of the Zephyrs hiding or reducing large portions of profit by implementing several accounting tricks and that the financial statements do not accurately reflect just how much revenue the baseball club
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Kansas City Zephyrs Baseball Club Roster Depreciation ✓ Economic Reality =US GAAP I agree that most of the players actually improved their skill with experience‚ so if anything‚ there should be an increase in roster values over time. So from the perspective of economic reality‚ this is valuable asset like intangible assets. This asset is similar to the good will. Under previous US GAAP‚ the goodwill should be depreciated but in new US GAAP‚ it has been changed not to be depreciated.
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Parties Involved: Players; Professional Baseball Players Association (PBPA) Owners; Owner-Player Committee (OPC) Bill Ahern; Arbitrator CONFLICT: Players feel that they should share in the teams’ profits will be biased towards accounting that yields higher net profits so that they may argue for a stake in the profits feel that the owners are hiding their profits through accounting tricks Owners contend that the teams are actually losing money each year will be biased towards accounting
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KANSAS CITY ZEPHYRS BASEBALL CLUB: A BASEBALL ACCOUNTING DISPUTE The controversy between the owners and players concerning how to account the expenses is crucial to understand if the company could be profitable and then able to meet players’ requirements. In this case three problems are under the scrutiny of the arbiter: roster depreciation‚ player compensation and the transfer pricing of related party operation‚ thus issues regarding the stadium cost. Players and owners are struggling against
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Kansas City Zephrys Baseball Club‚ Inc. Case Study Kansas City Zephrys Baseball Club‚ Inc. Case Study Issue: The PBPA believes the OPC should share with the baseball players the profits of the major league baseball teams Who is right? & Why? Roster depreciation Regarding roster depreciation‚ I would agree with the PBPA lawyer‚ Mr. Hanrahan‚ that depreciation expense should not be included in the income statement of the team since there are no plans on selling the equipment‚ only plans of sharing
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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 of related party operations
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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? Submit your answers in your own Word document by the end of Week 1. Bill Ahem was asked to be an arbitrator in a major dispute regarding profitability between the Owner-Player Committee (OPC‚ the representatives of the owners of the 26 major League baseball teams in collective bargaining negotiations) and the Professional Baseball Players Association
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