Casino Paradise—A Learn-by-Research Approach in the Study of FASB Codification

• In Event: Reception with ELS posters

Abstract

Use of online research experience is an effective way to bridge accounting theory to practice. Since the codification of existing GAAP standards in 2009, it has become more important for students to engage in practical application of FASB codification and be better prepared for their CPA exams and future career. We have designed a real world learning experience using an interesting research assignment to supplement perceived traditional “dry and boring” textbook exercises.
“Assume a Casino staff accountant reports to the controller on its financial statements. Casino Paradise has 250 slot machines which payout a set jackpot amount of $3,000 (base jackpot) roughly every 6 months. The casino’s financial year-end is September 30. The 250 machines have been in service since June 1. However as of September 30, patrons have failed to “win” a jackpot on these machines. The controller has asked the accountant to determine how much liability to accrue (if any) as of September 30. ”

The research project highlights and assesses student comprehension of (1) jackpots paid out by casinos recorded as “contra-revenues” instead of expenses; (2) No liability associated with the jackpot is recognized until the entity has the obligation to pay the base jackpot. [Per ASC 924-605-25-2 references to 924-605-55-1: Thus casino has no obligation to pay base jackpot until it is “won”, no liability should be recorded as of September 30.]

We suggest that instructors can walk through how the codification is structured via “AAA Academic Access” and possibly demonstrate at least one example before the assignment, and revisit the codification after this assignment. Most students have responded very positively to this effective learn-by-research approach based on a scenario from the real world.

Authors

• Fujen Hsiao, University of Minnesota-Duluth

• Lei Han, Niagara University

• Jerry W. Lin, Colorado State University - Pueblo