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Editor's Note: This article is the first in a series reviewing various aspects of the Uniform System of Accounts for the Lodging Industry, Ninth Revised Edition.
The New Guidelines for the Lodging Industry
How do you deal with China, Glassware, Silver, Linen & Uniforms (CGSL&U)? Some people could give you a rundown of the best products to use in cleaning and maintaining these items. The hotel accountant, however, is faced with the issue of how to account for CGSL&U, which will directly impact the hotel's current period income. Should the original cost be capitalized as property and equipment and depreciated over its estimated useful life? Should the expenditure for CGSL&U be considered inventory, with the asset being reduced and expense recorded as the items are placed in service? Are there other methods to account for CGSL&U? How do other hotels account for it? What is the right way? Does it really matter?
The last question is the easiest to answer: Yes! With the lodging industry facing increased competitive pressures, it is important for the hotel's financial executive to know how other hotels are accounting for CGSL&U. By doing so, the hotel can ensure that it is not taking as expense more than is typical of the industry. Ideally, the Uniform System of Accounts for the Lodging Industry (USALI) should be followed so as to ensure consistency in accounting for the CGSL&U among hotels. Unfortunately, not all hotel accountants are familiar with the guidelines of the recently revised uniform system. Failure to follow the guidelines leads to inconsistency in the industry. In addition, by following the USALI guidelines, the hotel's performance can be validly compared to industry averages based on the USALI, thus allowing the hotel to benchmark its performance with that of the industry.
Survey
To determine how hotels were accounting for CGS&L, a survey was conducted involving a random sample of 500 members of HFTP associated with lodging properties. (Note: We did not include the accounting for uniforms in our survey.) One hundred forty-one usable responses (28 percent) were received. The survey collected demographic information as well as specific data regarding the respondents' accounting for CGS&L. Note: This survey was mailed prior to the release of the latest revision of the...