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The film industry does play some games by setting up different companies and then accounting for them separately. I had more in mind just normal GAAP accounting of an entity.
For instance, say you spend $1B on your infrastructure, then get annual revenues of $100MM on operating expenses of $50MM. You are clearing $50MM every year, but the $50MM isn’t necessarily profit and you may not be profitable until you’ve finished wiping the $1B of capital expense off your books by amortizing it over some defined period of time.
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[–] Thisismyvoatusername 0 points 1 point 1 point (+1|-0) ago
The film industry does play some games by setting up different companies and then accounting for them separately. I had more in mind just normal GAAP accounting of an entity.
For instance, say you spend $1B on your infrastructure, then get annual revenues of $100MM on operating expenses of $50MM. You are clearing $50MM every year, but the $50MM isn’t necessarily profit and you may not be profitable until you’ve finished wiping the $1B of capital expense off your books by amortizing it over some defined period of time.