(comments) AirwaySim v.1.3 news, previews & info

[[SC] - King Kong]

Base in the UAE and no one cares about your taxes

[Minto Typhoon]

The slots are a zero value asset. 

Once you buy them they have to be depreciated to a zero value as they cannot be sold, or traded for a price.

I am not suggesting slot trading.

[abezerra]

The slots are a zero value asset. 

Once you buy them they have to be depreciated to a zero value as they cannot be sold, or traded for a price.

I did not participate to the feature rq forum, but Minto you are right. Someone had already tried to explain that, from an accounting perspective, considering slots as assets in this game is not totally accurate. Though, a different option was taken.

Reading through the 2008 article by Deloitte to the end, they suggest that a condition for recognizing slots as assets would be the existence of an official or secondary market for slots. There is no such market in this game. What we pay for are non-refundable entry fees - that it would be more reasonable (and also simpler in the financial statements layout) to continue recognizing as expenses in the income statement at the time they are incurred.

[[ATA] - lilius]

It feels very distant to value such an essential and incomebringing asset as slots to zero just because you cant sell it. I would only agree to that once you quit flying your route or it cant be used for some other reason.

[schro]

I don't think that there's a good way to hold the slots with the correct real world accounting treatment because slots are handled differently at different airports across the world (and actually, are only in play at the most crowded in the world) along with our inability to resell or trade our slots. I'll repeat the option that come to mind, but I think it has already been decided by the powers that be here, even if the choice is imperfect out of a set of imperfect options.

1. Slots held at zero asset value - this would mean that a full expensing of the asset must occur upon purchase. This doesn't jive well with accrual based accounting which is based upon matching the expense for the period which the asset was used (i.e. if they're used over 15 years, then they should be depreciated over 15 years). This would be easiest for current players to understand, as this has similar tax consequences to the current method.

2. Slots amortized over their useful life (not depreciated, because they're intangibles) - In order to amortize the slots, you've have to demonstrate that they have a useful life and/or are used up. The way they are structured in the game is a lot like land - they do not get used up over time. They're just as useful today as they will be 50 game years from now (unless of course, the airport becomes a ghosttown due to city based demand slapping it with a large trout). Since they're not "used up" over time, you can't really amortize even though it is a concept that players would likely understand.

3. Slots held as an asset at book value - Since they're intangibles that don't get "used up", this seems to fit, however, given that they have no resale value, one could argue that this type of valuation would fail an impairment test (thus, resulting in a portion of it being expensed to reduce the asset value). This would also inflate the assets of a company beyond what we are accustomed to seeing as well as result in a significant tax liability to players as slots are purchased (i.e. if you "make" 4m in a period and then "spend" 4m on slots, you still owe the full tax amount on the 4m).

In my opinion, each of the 3 options above has a number of flaws with it that doesn't jive with "the real world", but we're also trying to compare the AWS world that has some game mechanics that are not in sync with the real world either.

[dmoose42]

schro - I agree with your analysis here.  I suspect that part of the reason for including them as an asset today (option 3 in your list) is that at some point in the future, slots may become tradable depending on how the slot system / airport growth elements are enhanced as part of the city-based demand functionality.

[LemonButt]

Assuming the plan to switch to terminals where players would have their own exclusive slot pool is still on, accounting for slots as an asset will be moot.  If a player spends $10 million to expand their terminal and add new available slots, they could depreciate that $10 million over a period of 15 years or whatever (useful life of terminal).

[dmoose42]

You still would have slots at the destination airport.

[abezerra]

In my opinion, each of the 3 options above has a number of flaws with it that doesn't jive with "the real world", but we're also trying to compare the AWS world that has some game mechanics that are not in sync with the real world either.

Well, once it has been decided that slot entry fees are recognized as assets, in my opinion the less painful option is number 3.
I assume that routes future revenues alone make (almost) always the fair value of slots higher than their entry fee. So the impairment test should not be a problem.

[abezerra]

Sami, I am not reporting it as a bug, but could you please take a look at my balance sheet

Asia Challenge
https://www.airwaysim.com/game/Info/Airline/View/376/135#AirlineInfo

Prepaid expenses in current assets = USD 2 484 375 (weeks 21 and 22).
What does this amount stand for? I understand from the manual that this BS item should only be related to the prepayment of leases. But I have not ordered any aircraft on lease for several months, the only orders I had recently were purchased aircraft (as you can see by the deposits).
Am I missing something?

[Sami]

It's a prepaid lease of aircraft dbid #16322, reg BSH. Delivered already a time ago, so that's probably a leftover from the conversion. Have to check/adjust.

[ArcherII]

In the airline information page, shouldn't the Company Value meter be labelled as Shareholders' equity?

[swiftus27]

Owners equity and company value are basically one and the same.   This game isn't GAAP compliant

[Sami]

This game isn't GAAP compliant

...and you keep repeating that, and haven't even looked at the latest changes (??).. bah..  

In the airline information page, shouldn't the Company Value meter be labelled as Shareholders' equity?

Company Value as an expression will be removed in due time, it's visible here and there for some time still..

[ArcherII]

Owners equity and company value are basically one and the same.   This game isn't GAAP compliant

Wow, I feel like asking for the aircraft's falange 

[dmoose42]

This game isn't GAAP compliant

This is only true until Sami brings in Deloitte to validate that it's GAAP compliant.  Until then we are on our own... 

[ezzeqiel]

uhhh, this is interesting... playing with taxes just got more difficult... hehe

Too bad we don't have "creative accounting" here


PS. I like this... in previous games "fiscal paradises" had no advantage over heavily taxated nations, since (with proper planification) nobody payed taxes... now, there's a real incentive for airlines to go over paradises like UAE and it's zero taxes policy...

That seems pretty realistic to me, since IRL major US and Europe based carriers always complain about Emirates being subsidized heavily by their government...

[slannoy]

Owners equity and company value are basically one and the same.   This game isn't GAAP compliant

Which one UK GAAP LuxGAAP USGAAP IFRS? Valuation méthodes can varies à lot. Here we are in AwsGAAP :-)

[rubiohiguey]

I had over 24.5 million prepaid taxes last year. My end of year resulted in tax loss. So I should have a lot of prepaid taxes (paid during the good months) returned this January Game year.

BUT

On tax calculation: taxes returned: 0

How come?

[BD]

I had over 24.5 million prepaid taxes last year. My end of year resulted in tax loss. So I should have a lot of prepaid taxes (paid during the good months) returned this January Game year.

BUT

On tax calculation: taxes returned: 0

How come?

I had same question about the message...in the transition to the new accounting system it does not show this info, even though the line items above the tax rebate line show that a refund is due.

Check your Cash Flow and Income Statements for January...you would see a refund was actually given if you were due one prior to the new accounting kicking in (e.g. you made a large aircraft purchase).