According to their annual reports, Circus Circus and Mirage Resorts, operators of casinos in Las Vegas, use the following policies:
Circus Circus Year ended January 31 (in thousands) 1998 1997 1996 Revenues $1,419,734 $1,393,727 $1,348,983 Less: Complimentary allowances (65,247) (59,477) (49,387)
$1,354,487 $1,334,250 $1,299,596 Revenues include the retail value of rooms, food and beverage furnished gratuitously to customers. Such amounts are then deducted as complimentary allowances. The cost of such rooms, food and beverage were included as casino expenses as follows: $45.9 million, $37.9 million, and $34.5 million, for the fiscal years ended January 31, 1998, 1997, and 1996 respectively. For the three years, approximately 85%-90% of such costs were for food and beverage with the balance for rooms. Casino revenues are the net differences between the sums received as winnings and the sums paid as losses.
Mirage Resorts The company recognizes as casino revenues the net win from gaming activities, which is the difference between gaming wins and losses. Revenues include the estimated retail value of rooms, food and beverage and other goods and services provided to customers on a complimentary basis as follows:
Year ended December 31 (in thousands) 1997 1996 1995 Rooms $ 55,153 $ 55,125 $ 52,592 Food and Beverage 64,575 66,424 63,664 Other 7,770 7,264 6,716 $127,498 $128,813 $122,972 After being included in gross revenues, such amounts are then deducted as promotional allowances. The estimated cost of providing these promotional allowances totaling $90.2 million in 1997, $88.3 million in 1996, and $87.2 million in 1995, have been classified primarily as casino costs and expenses.
Required: Do the two companies use the same accounting policies? Explain whether you agree with the policies. Explain which disclosure you prefer. TYK-1