Hard Rock Hotel

Hard Rock Hotel

Question 1

According to the book, page 104, the format used in showing the income statement and balance sheet is a "multiple step" format. The multiple step format is very common because it makes for clean balance and income sheets. With a multiple step format you break down each category into sub-divisions which then give you subtotals making it easier to calculate the final numbers.

Question 2

The note to describe an accounting rule applied in the company's statements is the note on "Depreciation and Amortization". This note states that land improvements, buildings and improvements, equipment, furniture and fixtures, and memorabilia are recorded at cost. Also, that depreciation and amortization are computed using the straight-line method over the estimated useful lives for financial reporting purposes and accelerated methods for income tax purposes. It then gives those estimated lives for each four things listed.

The note to which presents additional detail about a reported financial statement number is the note entitled "Casino Revenues and Complimentaries." This note shows the revenues broken into the different business segments: Food and Beverage, Lodging and Other. Each section is also broken down to show how revenues are recorded and which section each revenue is supposed to go in. It also tells when each revenue is to be recorded.

The note which reports financial information not listed in the statements is the note entitled "Construction Commitment". This was a proposal, given by an architectural firm, that was agreed to and therefore a contract was signed in March 2005 to remodel and expand the current resort. The agreement is estimated to cost $300,000.

Question 3

There was an article released Feb. 25, 2005 on hardrock.com giving Hard Rock Hotels annual earnings. The 10-k was filed on Mar. 31, 2005. Therefore, there was a difference of about a month between the two release dates.

Question 4

Return on Equity (ROE) = Net Income / Average Stockholder's Equity