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8/1/2013
InterContinental Hotels Group: An Accounting Overview
InterContinental Hotels Group, PLC (IHG) has in addition guest rooms than any other house of entertainment company in the world. IHG’s nine house of entertainment brands (InterContinental Hotels and Holiday Inn are pair examples) operate in specific regions and emporium segments that best cater to their vocation model in terms of growth and current operations. Their form focuses on franchising and managing hotels in the same proportion that opposed to owning and operating the hotels, that fosters quicker growth and a less capital commitment. This “asset-light” mould allows IHG to focus on receipts delivery systems and marketing efforts to encourage their franchised and managed operations (“Overview,” p. 1).
IHG identified their precious accounting methods in their 2012 Annual Report and Financial Statements. Plant, property and rigging “are depreciated to a residual excellence over their estimated useful lives, namely: buildings: lesser of 50 years and unexpired expression of lease; and fixture, fittings and rigging: three to 25 years” (Annual, p. 91). They utilize a straight-line depreciation and re-asses residual value annually. IHG also amortizes their dim assets (software, management contracts, etc.) forward a straight-line basis for the estimated good life of the asset. Inventory is treated at the same time that an almost inconsequential asset to IHG and is scarcely mentioned in their reports. This predicament includes finished goods and consumable supplies; they’re stated at the debase of cost and net realizable excellence (Annual, p. 91). IHG earns reward from several sources and accounts in favor of each one differently:
Franchise fees and dealing fees: revenue is recognized when earned and realizable/realized in a state of being liable to the terms of the contract.
Owned and leased: revenue is recognized when rooms are occupied and pabulum and beverages are sold (Annual, p. 95).
Trade and other receivables are destitute of interest if payment is made in the inside of 30 days. IHG uses the aging of receivables manner, running in...
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