Other Moneyhatting Threads:

Direct Cash Payment - http://www.vgchartz.com/forum/thread.php?id=37195&start=-0

Payment of Development Costs / Expenses

This method is somewhat similar to direct cash payments.  However, the amounts should be smaller but over a longer period of time.

For MSFT, it would be reasonable for these payments to be reported in expenses, since paying for the costs over a period of time does constitute as an “expense” in the financial/business sense.

For EA, the effect on their financial statements are the following:

1. If MSFT is paying for the expenses of a games, then this money can not be classified as revenue.
2. These transactions would show up in their cash accounts and/or the statement of cash flows and/or
3. If MSFT is paying for the transactions, then the “expenses” are going to be LESS than if EA had paid for them by itself.  This would then affect their reported expenses – which would show up in their gross margin and income statements.

Therefore, in this scenario, the net income of EA would be higher than normal.  If revenues are the same, and income is higher, this could be evidence that this type of moneyhatting has occurred.

Of course, in bigger companies, a few million dollars is easily lost in their financial statements.

Therefore, a smaller company would be easier to investigate than a bigger company.

Still, this method, in my opinion, is probably not very common due to some of the same problems as direct cash payments.

These posts are very interesting, especially if you're allergic to accounting, like I am, but I think they might work better in one massive thread than spread all over like this.

I'm always scared that long posts = people not reading.

I do like these threads, but I too think they would be better in one rather than spread all out (if only so that you only have to keep bumping one). Even spread out, though, with the links it is fine.

I agree with you that these types of payments are probably not that easy to find in a company the size of EA.

However, just looking at EA's latest report (record revenue, still not pulling much in the way of profit), I very much doubt that there is much of this sort of moneyhat going on with EA. If they are receiving some, and their operating budget is still that huge, they are doing something wrong from a business perspective - and if there's something EA knows how to do, it's run a business.

@alpha

I'm not singling out EA specifically. In my original thread, I just used MSFT and EA as examples.

But the other threads, I just used "console maker", or Sony, etc.

So it flip flops.

I think you should combine all the moneyhat and make it into article. I find all your post very interesting, although sometimes confusing since you tends to split them up into little segment.

I think paragraph break would be fine if people find long post not worth reading then it's their lost. The way you have all your post are very difficult to read (for me anyway). They seems very disjoint and disconnect.

I don't know if member is allow to post article, may be you can get one of the mod to host your article?

@ mysticD

I suppose. Though when it is really long, people tend not to read it.

As well, I split it up so that people can read it - as to how I came up with the thought process. That is, I try to make it simple and logical.

But I suppose, it depends on the reader.

Thanks.