The Reel Wheel The Reel Wheel is an observation wheel located at a new outdoor m
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Question
The Reel Wheel
The Reel Wheel is an observation wheel located at a new outdoor mall situated between two of Coliseum’s hotel properties on the Las Vegas Strip. The Reel Wheel is the largest observation wheel in the world, standing 550 feet tall. There are 28 observation cars, each holding up to 40 people. The cars have 225 square feet of interior space, and each weighs roughly 44,000 pounds. It takes approximately 30 minutes for the wheel to make a complete rotation.
The Reel Wheel operates daily – year-round – from 11:00 a.m. to 2:00 a.m. Operations between 11:00am and 5:00pm are considered “day time” rides; those between 5:00pm and 2:00am are considered “night time” rides. During night time operations, the wheel lights up with more than 2,000 LED lights that bathe the wheel and its riders in a rainbow of bright and colorful lights.
Within each of the 28 observation cars, interior lighting, TV monitors, music, and sound effects entertain guests while the wheel is in motion. Although Coliseum primarily displays its own advertising images in each of the Reel Wheel observation cars, it also sells advertising space to complementary businesses.
In addition to ticket sales and advertising revenue, the Reel Wheel generates additional revenue through the sale of food and beverages, photos, and Coliseum-themed souvenirs from a gift shop located at the base of the observation wheel.
Because of the allure of seeing the Las Vegas Strip at night, ticket sales for “night time” rides are charged a premium. Children 12 and under always ride free on the Reel Wheel, and Las Vegas locals receive a 40% discount off of regularly-priced tickets. In order to entice more people to ride the Reel Wheel during the hottest summer months, a discounted price structure ($5.00 off each ticket) was offered during the third quarter of 20X5 (July through September). Locals are not eligible for the summer pricing structure, but they continued to get 40% off of regular ticket prices.
In addition to selling tickets to tourists and locals, the Reel Wheel also sells tickets in wholesale batches to travel agencies, local hotels, and other tourism-related services that bundle the tickets together with vacation packages and other offerings. The wholesale ticket prices do not vary based on time of day or season.
Use Excel to create analytics showing your solutions to the following three questions. Use separate tabs to show your work in analyzing each question.
1. In order to better understand whether the reported number of total passengers in 20X5 (as advertised by Coliseum) is reasonable, develop a quick estimate of the maximum number of passengers possible during 20X5. In other words, how many passengers could ride on the Reel Wheel if every passenger car was filled to capacity for the entire year? Given that not every car will be filled to capacity, develop a rough estimate for a “reasonable” number of reported passengers during the year. Does the number of reported passengers seem reasonable?
2. Develop an independent estimate of Ticket Sales Revenue using highly-aggregated data (e.g., Total Number of Paying Passengers, Average Ticket Price). Evaluate this independent estimate by comparing it to the client's reported account balance. Determine if the reported balance is within a tolerable range of your independent estimate using this aggregated data approach.
3. Using the disaggregated data available to you, develop an audit work paper to report a more precise estimate for Ticket Sales Revenue in 20X5 at the Reel Wheel. Compare your revised estimate using disaggregated data with the client’s reported account balance and determine (1) whether or not the client’s amount appears to be materially misstated and (2) what, if any, additional audit work is required to test the account balance.
Part 2: Reflect on the Engagement
Given your objective of using the analytical procedure to provide most of the assurance needed regarding the Ticket Sales Revenue account for the Reel Wheel, is the estimate developed in 2.3 precise enough, or is more precision needed? Explain.
Given that much of the data used in your analytical procedure is provided by your client, what additional audit procedures could you supplement this substantive analytic with to provide additional corroborating evidence that these ticket sales actually occurred?
Some companies use a third-party service provider to sell tickets to customers and to collect tickets upon entrance into the venue. Consider how your approach to auditing the Ticket Sales Revenue account would be different if a third-party ticket provider with a SOC 1 Type II report were providing these services for the client and was therefore the provider of ticket sales data (e.g. number of passengers, ticket prices, seasonality, daytime vs. nighttime rides, etc.).
Here I have put the above excels for ease of use:
20X5 Summary Information & Data for "The Reel Wheel" Description Data Point Unit Label Tickmark WP Reference Observation Wheel Height 550 feet PBC, RW Number of Passenger Cars 28 cars PBC, RW Interior Space per Car 225 square feet PBC, RW Maximum Capacity per Car 40 passengers PBC, RW Time Required for Car Revolution 30 minutes PBC, RW Hours of Operation (Open) 11:00am . PBC, RW Hours of Operation (Close) 2:00am . PBC, RW Description (20X5 calendar year) Data Point Unit Label Tickmark WP Reference Days in Operation 361 days PBC Total Passengers 3,058,452 passengers PBC from A.02 Total Children Passengers 250,389 passengers PBC A.02, A.03 Description (20X5 calendar year) Data Point Unit Label Tickmark WP Reference Regular Ticket Price (Child; Age 0 - 12) $ - dollars RW Regular Ticket Price - Day (Adult; Age 13+) 24.95 dollars RW Regular Ticket Price - Night (Adult; Age 13+) 34.95 dollars RW Summer Ticket Price - Day (Adult; Age 13+) 19.95 dollars RW Summer Ticket Price - Night (Adult; Age 13+) 29.95 dollars RW WholesaleTicket Price 12.95 dollars PBC Coliseum Entertainment Substantive Analytical Procedure - Ticket Sales Revenue: The Reel Wheel Year-end Audit: December 31, 20X5 Workpaper (WP) ID: Date: Prepared By: 20X5 Unaudited Account Balance (Ticket Sales Revenue) WP Reference from Trial Balance AA.09 Account Unit Label dollars dollars Tickmark PBC Data Point Ticket Sales Revenue (unaudited) Allocated tolerable difference 73,468,219.00 675,000.00 20X5 Summary Information & Data for "The Reel Wheel" Description Data Point WP Reference Unit Label feet cars Observation Wheel Height Number of Passenger Cars Interior Space per Car Maximum Capacity per Car Time Required for Car Revolution Hours of Operation (Open) Hours of Operation (Close Tickmark PBC, RW PBC, RVV PBC, RW PBC, RW PBC, RW PBC, RVV PBC, RW Tickmark PBC PBC PBC Tickmark 550 225 square feet 40 passengers minutes 11:00am 2:00am Data Point Description (20X5 calendar year) Unit Label days WP Reference Days in Operation Total Passengers Total Children Passengers 361 3,058,452 passengers from A.02 A.02, A.03 WP Reference 250,389 assengers Unit Label dollars dollars dollars dollars dollars dollars Description (20X5 calendar year) Data Point Regular Ticket Price (Child; Age 0 12) Regular Ticket Price - Day (Adult; Age 13+) Regular Ticket Price - Night (Adult; Age 13+) Summer Ticket Price - Day (Adult; Age 13+) Summer Ticket Price - Night (Adult; Age 13+) WholesaleTicket Price RW RW RW RW PBC 12.95 Where noted, data is verified at multiple sources (e.g., PBC, RW). ·The Reel Wheel sells some tickets to wholesalers-such as third-party travel websites-if booked as part of a travel package that includes a stay at a Coliseum hotel. . Although not specifically listed on the RW website, prices for Las Vegas locals Photo ID required) are 40% off of Regular Adult (Day, Night) prices. No summer discount for locals. Tickmark Legend PBC RW Provided by client (Coliseum Entertainment) Sourced from Reel Wheel public websiteExplanation / Answer
The excessive roller is the center-piece of The LINQ, a new outdoor looking, dining and enjoyment district constructed for Caesars amusement by Arup Engineering. Placed on Las Vegas Boulevard across from Caesars Palace, the wheel points 28 spherical, glass-enclosed cabins delivering 360-measure views.
Each cabin weighs 44,000 lb (19,958 kg) and holds as much as 40 individuals, giving the high roller a highest capability of 1,one hundred twenty. The wheel itself has a diameter of 520 feet (158.5 m) and would possible seem out of position on the glittering Vegas Strip if it wasn't blanketed in a 2,000 LED lighting fixtures procedure that places on a mild exhibit from nightfall until dawn.
Unlike the Ferris wheels you can in finding at your regional reasonable that cling the passenger cabins on the rim so that they keep upright thanks to gravity, the high curler's cabins are established externally on the rim of the wheel and depend on motors to preserve the drugs, and their occupants, the proper means up.
There are currently simplest three other statement wheels with motorized cabins in the world: the aforementioned Singapore Flyer; the 443-toes (a hundred thirty five m) tall London Eye; and the 394-feet (a hundred and twenty m) tall Melbourne big name in Australia.
Nonetheless, Vegas may not maintain onto its title as the residence of the world's tallest remark wheel for long with plans to construct the 625-feet (a hundred ninety.5 m) tall ny Wheel at Staten Island's Harbor Commons that is scheduled to open in 2016.
The high curler takes half-hour to entire a rotation, with the rate for a 30-minute journey establishing at US$24.95 for the period of the daytime, growing up to $fifty nine.Ninety five for an specific pass that permits you to pass the road at any time.
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