Accounting Analysis The purpose of this section is to identify and expand the accounting practices of Sabre and if it truly captures the business practices of the company. This section will examine the policies that are in place that align with GAAP as well as those policies that don’t to understand fully the credibility of Sabre’s Financial Statements. Policies Accounting policies as detailed in Sabre’s annual report include significant estimates and assumptions, include, among other things, estimation of the collectability of accounts receivable, amounts for future cancellations of bookings processed through the Sabre GDS, revenue recognition for software arrangements, determination of the fair value of assets and liabilities acquired …show more content…
Some revenue models are used in multiple businesses. Travel Network primarily employs the transaction revenue model. Airline and Hospitality Solutions primarily employs the SaaS and hosted and professional service fees revenue models, as well as the software licensing fee model to a lesser extent. Contracts with the same customer which are entered into at or around the same period are analyzed for revenue recognition purposes on a combined basis across our businesses which can impact our revenue recognized. Flexibility Property and equipment are stated at cost less accumulated depreciation and amortization, which is calculated on the straight-line basis. Buildings Lesser of lease term or 35 years, Leasehold improvements, Lesser of lease term or useful life, Furniture and fixtures 5 to 15 years Equipment, general office and computer 3 to 5 years Software developed for internal use 3 to 5 years. Goodwill is the excess of the purchase price over the fair value of identifiable tangible and intangible assets acquired in business combinations. Goodwill is not amortized but are reviewed for impairment on an annual basis or more frequently if events and circumstances indicate the carrying amount may not be …show more content…
There is the Transaction Revenue Model—This model accounts for substantially all of Travel Network’s revenues. We define a direct billable booking as any booking that generates a fee directly to Travel Network. Transaction fees include, but are not limited to, transaction fees paid by travel suppliers for selling their inventory through the Sabre global distribution system (“GDS”) and transaction fees paid by travel agency subscribers related to their use of the Sabre GDS. Pursuant to this model, a transaction occurs when a travel agency or corporate travel department books, or reserves, a travel supplier’s product on the Sabre GDS. Next is the Professional Service Fees Revenue Model—Our SaaS and hosted offerings can be sold as part of multiple element agreements for which we also provide professional services. Our professional services are primarily focused on helping customers achieve better utilization of and return on their software investment. Then there is the Software Licensing Fee Revenue Model—The software licensing fee revenue model is utilized by Airline and Hospitality Solutions. Under this model, we generate revenue by charging customers for the installation and use of our software products. Some contracts under this model generate additional revenue for the maintenance of the software
The fair value of identifiable net assets includes four accounts classified under unrecognized intangibles. In order to determine which unrecognized intangibles is included in goodwill, ASC 805.20.55 was consulted. The Customer List had a fair value of $10M and was not included in goodwill. ASC 805-20-55-4 states that customer lists are licensed and can be sold; hence meeting the first criterion of an identifiable asset and not included in goodwill. Assembled Workforce was among the unrecognized intangibles. According to ASC 805-20-55-6, assembled workforce is included goodwill because it does not meet neither of the identifiable asset criterions. Trademark is not included into goodwill due to the fact that it meets the first criteria of an identifiable asset (ASC 805-20-55-17). The Licensing Agreement is a contractual agreement, meeting the second criteria of the identifiable asset; therefore not incorporated into goodwill (ASC 805-20-55-31). Lastly, In-Process Research & Development is not subsumed into goodwill because technology processes can be sold or exchanged; meeting the first criteria of an identifiable asset (ASC
The company transfers the goods and services to its customers in an amount that company receives. According the Kieso’s Intermediate Accounting Textbook, the company follows the five step process for revenue recognition. First, they identify the contract with customer. For example, how much a customer wants to order. Second, identify the separate performance obligations in the contract such as Buffalo Wild Wings has only one performance obligation which is to provide the food. Third, determine the transaction price. In this case, it will be how much Buffalo Wild Wings expect to receive from customer in exchange of the goods. Fourth, allocated the transaction price to the separate performance obligations which is to deliver the food. Lastly, Buffalo Wild Wings has to recognize the revenue when the food is deliver to the
Businesses reach a particular point in their operations when redeveloping their business model becomes essential for their continued success. A business model consists of four meshing elements, which work in harmony to create and provide value. The elements include customer value proposition, profit formula, key resources and essential processes (Johnson, Clayton and Kaggerman 60). The customer value proposition elements involve the companies coming up with a particular way of creating value for the customers by providing solutions to certain problems. The element is particularly evident when a company develops a new product of services to address some of the customer needs in a convenient or satisfactory manner.
Operating Revenues: The essential component was an expansion in Concessions of "7.96%" because of an increase in enplanements. In the monetary year "2013" working incomes expanded by "10.68%" from "2012". The essential variable was an increment in Space and office rentals of 51.48% because of the signatory carrier understanding.
One way to measure the success of a company is to examine, in depth, their financial history. Naturally, this includes all financial documentation past, present, and future. Setting goals and open communication in my opinion, can contribute to the financial success of a company. Without a strong team foundation, knowledgeable staff, and thorough accounting practices, I believe a company has no future. The choice of focus between managerial accounting and financial accounting can make or break a company.
Zott, C., Amit, R. And Massa, L. (2011) ‘The Business Model: Recent Developments and Future Research’, Journal of Management, vol.37, no.4 pp.1019-42 [Online]. Available at http://jom.sagepub.com/content/37/4/1019 [Accessed 24th November 2013]
Lange, Fornaro, and Buttermilch (2015) focused their research on the FASB Accounting Standards Update (ASU) 2011-08, in regards to Intangibles – Goodwill and Other: Testing Goodwill for Impairment. The authors elaborated on how reporting has been done in the past and how the changes made for private companies has helped ease the financial reporting of goodwill. In addition, the authors discussed the definition of a public business entity. This helps to allow private companies to determine the proper way to report their financial
Additionally, it measures the speed with which to institute restrictions on non refundable rates, length of stay in the facility and prediction of arrivals. As a management toll, revenue management has enhanced cost control, distribution channels and getting the right marketing mix in the business. In summary, revenue management is critical in the hotel industry for sales of rooms and services as the main products at the right price, time and right
The FAS has made changes throughout the years in the way to account for goodwill. Goodwill is when a company attempts to merge with another company to obtain the valuable intangible assets. These assets are anything that can 't be seen or touched. Valuable intangibles can be anything like a company name because it is well known. Many times companies will decide to merge because it can be beneficial to them to merge with well-known entities. This can also be less costly and less time-consuming versus building a brand new business on its own. On many occasions, gooodwill is amortized on accounting records. Amortization is not the most favorable approach for companies who are trying to attract investors. This because when amortization is not present in the books, it means that there aren 't high physical cash profits for shareholders.
In a significant step towards convergence, the FASB and IASB (“the Boards”) issued the Exposure Draft, Revenue from Contracts with Customers in 2010. The goal was to create a single joint revenue recognition standard that companies could apply consistently across industries and capital markets thereby improve financial reporting. The Boards highlighted a number of improvements in the proposed standard - removing inconsistencies, improving comparability, requiring enhanced disclosures and clarifying the accounting for contract costs. Instead of focusing on “realized/realizable” and “earned” the Exposure D...
Shafer, S. M., Smith, H. J., & Linder, J. C. (2005). The power of business models. Business
This classification looks into the relationship between costs and revenues, the behavior of costs in relation to changes in activity levels and the relevance if costs and revenues.
There are four key resources that can be broken down into categories; human, financial, physical and intellectual (Martin, 2015). Effective key activities are vital pieces of the puzzle that help the business deliver its value propositions ("20 Minute Business Plan: Business Model Canvas Made Easy," n.d.). These activities need to be carried out so the product or service that was promised can be delivered ("20 Minute Business Plan: Business Model Canvas Made Easy," n.d.). These particular activities coincide with the revenue stream building block, which is a procedure a company follows to get their chosen customer segments to purchase the service or product. A revenue stream can be generated seven ways; an asset sale, a usage fee, a subscription fee, lending/leasing/renting, licensing, a brokerage fee, and finally advertising (Martin,
"Goodwill may be classified into purchased goodwill' and non-purchased goodwill'. Purchased Goodwill arises from the acquisition of an existing business, while non-purchased goodwill has been built-up over time and cannot be verified objectively".
The revenue/cost period-: Revenue and the cost period in accounting that the company get income from normal business activities. It’s referred to normal business income that the company got by selling their product and service.