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Monopoly: An Analysis of Its Transactions.

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Monopoly: An Analysis of Its Transactions Dana W. Edwards Accounting 502 November 29, 2001 Monopoly: An Analysis of Its Transactions In 1933, Charles Darrow lived in the period known as the Great Depression. During this period the United States was experiencing massive unemployment and misfortune. This heightened period of economic ruin gave rise to the board game Monopoly which promised its players vicarious fame and fortune through characters such as a dog, a car, a horse, and many others. In addition to its leisure value, Monopoly provides valuable lessons in business, specifically for those interested in Accounting principles. The overall objective to Monopoly is to bankrupt all of your opponents. To do this, a player needs to acquire multiple properties while maintaining a reasonable amount of cash to pay debts such as rent and fees. The example company used in this analysis was Edwards Property Management (EPM) who managed properties for other companies and stayed at other properties in order to assess their competitive value. ...read more.


For example: Jan 1, 2001 Building - Hotel 96 Hotel Property 24 Cash 120 Description: Purchased Connecticut Avenue with cash. Assumed 80% of value is in existing building and 20% was in the land purchased. Given the current accounting rules, the land was not amortized but the buildings were. These buildings were depreciated over 10 years using the straight-line method. Because the actual date of acquisition for each of the properties varied considerably from the start of the year, EPM used the half-year convention as visible in the chart below. As a fee to their clients for managing their properties, EPM charges a flat fee of $200 per year total (one turn around the board) regardless of the number of properties managed. This fee is collected as the EPM representative (in this case the dog) passes the proverbial "Go" corner which also triggers the new fiscal year. This $200 is booked to the Precollected Revenue account. This money is precollected for services to be rendered throughout the year. ...read more.


In order to avoid a lawsuit, EPM immediately called the hospital and had an ambulance sent over. The client was very understanding and accepted our apologies. The accountants viewed this expense as an entry to the Medical Expense account. Jan 1, 2001 Medical Expense 100 Cash 100 Description: Paid for hospital visit when Mr. Slipper E. Feet fell on ice at the Boardwalk property. The Medical Expense was aggregated into the Miscellaneous Expenses account at year end as there were no other medical expense attributed to the company. The competition in the property management business was tough for Edwards Property management. In their fifteen years, they built an empire that spanned from Baltic Avenue to Boardwalk. However, they eventually were outgrown by the Car and the Hat who formed a larger corporation containing two monopolies, one consisting of the red properties and the other consisting of the purple properties. Competitive analysis proved to be too costly while visiting properties such as Illinois Avenue or New York Avenue. Luckily, EPM's accounting records were as solid as their reputation and the new corporation paid handsomely for the goodwill that EPM had built. ...read more.

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