The Fair Value of Play

I went to McDonald’s today. Not for the food but for the fun.  However, I did eat there.

McDonald’s sells a significant amount of food to parents and children.  Primarily because the family wants use the play area. So, how does a McDonald’s franchise account for this highly-prized asset category (PlayPlace).

A McDonald’s franchise owner incurs a few significant costs to supply the play area. 

1) The play equipment

2) The added building space. 

Other costs include maintenance and insurance related to the play area.

The play equipment would be capitalized and depreciated. The added building space would fall into the same category.

However, if McDonald’s considered the fair value of the play area, the resulting financial reports would be significantly different.  The value of the play area could be calculated using a discounted cash flow model. The incremental future cash flows would consist of the profit from sales made to families who are at McDonald’s primarily to use the play area.   

Injurious Act of Excessively Expectorating

Why doe the PGA care about spittle on the course? This act is seen as having an inverse effect of the PGA’s value.  The value of the association, in part, consists of the cultural landscape that it fosters.  Inconsiderate acts within the confines of the tournament are seen as negatively and directly affecting the Association. Therefore, the PGA rightly expects players to comply with the cultural norms or pay for the economic damages caused by any such deviation. While Keegan Bradley’s offense was minor, he could be fined.  In theory, the “fine” should be equivalent to the decrease in total value of the PGA brand caused by this specific infraction.