Accounting for EVE
I spent some time looking over EVE business/manufacturing tools, and came up with a few interesting items.
- EVE Income Analyzer is a free download Windows desktop app that downloads your wallet and produces lots of interesting reports on sales and trade. It has nothing useful for manufacturing other than sales reports.
- Manufacturers might do well to start with the Manufacturing Profit tool at EVE Industry, and a forum thread about it is here. This seems a really good tool to figure out "how much is training skill x to skill y going to be worth?" How much is broker relations or better standing at the station worth? And how much is manufacturing research going to be worth?
- For automatic import of data, Dedaf's Production Spreadsheet can import both character skill data and Eve Central price data. If you are running Excel 2003 or later. Probably a later version is better, Excel 2003 xml support is still shaky.
- EVE-Online Multiuse Economic Efficiency Planner, or EVE-MEEP will download and store your wallet data, price data from a variety of places (Eve-metrics and Eve-Central). You can do filters on your wallet transactions, I only wish it would then perform a summary. It has tools to help planning production efficiency, scheduling, research probability, skills, even a reprocessing calculator. I've tried it and it has a few bumps, but worth a look. Windows only.
- EVE Central data is a little bit like Wikipedia. Full of lots of interesting and useful data, but maybe not completely reliable. So an ingame corp named Arcelor Capital publishes both a manufacturing cost tool, and regular price data updates. It isn't free, it costs 10m ISK. In the forum thread introducing it, lots of people say they are signing up.
Nowhere did I find the tool that I really wanted. I want to be able to be able to figure out not how much money do I think I will make, but how much money *did* I make with product X. Because I want to know whether it was worth my time or not. Unfortunately, there isn't quite enough data in the cash journal xml to let this be automated. It's hard to match up sales, tax payments and broker fees. That's accounting.
So here I am, a game blogger writing about accounting, which to many is the spokesperson for boring. The truly beautiful thing about EVE is that if you don't like this kind of thing, you can pretty much ignore it and fly around doing something else, like pirating, or running missions. There's such a rich ecology in EVE, there's a niche for you. Maybe you become a contract hauler, a researcher, an explorer. Whatever. And you're never locked in to that job, you can always learn some new skills and do something else.
Big aside: I understand now why some capsuleers are reluctant to leave their station. As Tipa documents, we just got wardecced by a corp that appears to typically blockade an important hub world, Dodixie, for money. Several corps seem to be on their list. So if you want to do business there, you need to contract with someone else to do your shipping. It's dangerous out there in space.
On the other hand, those who do like this stuff engage in conversations about what the right way to do accounting for EVE is, and what are the tools that are needed, and whether banks are smart or dumb to ask for the kind of data they ask for.
READ THIS ONLY IF YOU ARE A FINANCE/ACCOUNTING GEEK
The discussion in the above mentioned thread has a lot of energy over whether to use LIFO, average cost or item selection. I find myself firmly on the side of LIFO, with the addition that if raw material prices drop significantly, I would be inclined to take a charge off, and revalue my raw material inventory lower. Take the bad news up front, that's how I feel. Otherwise, you are living in denial.
This stuff is incredibly engaging.
UPDATE: Added reference to EVE-MEEP
Labels: Eve, mmo economics
posted by Toldain | 11:29 AM
3 Comments:
You said LIFO. That was your first mistake. An arcane form of LIFO is basically my life. Interestingly (to me) in the real world, the US is one of the only jurisdictions that allows LIFO as a legitimate inventory accounting method. The IFRS (International accounting standards the US hasn't adopted yet.) does not include LIFO as a legitimate accounting methodology.
For US tax purposes, if you use LIFO, you have to use it for all reporting and are not allowed to restate any of your financials using another accounting system. Also, once you change to it, or from it, for tax purposes, you cannot switch easily to another accounting method. Only recently has the IRS released a pronouncement regarding an automatic switch to LIFO.
The reason for this is LIFO provides a permanent tax breaks in industries where some of your inventory is always going to be there (a base inventory) and your costs are always higher than when you started. I'm not sure why you'd use it if you weren't in that sort of situation.
LIFO tends to be used in the energy industry where you have base stocks that you will not eat into. These base stocks are generally priced very low (think of having lots of $0.26 per unit gas purchased in 1964 when prices are $5.00 per unit today). Your working inventory reflects the most recent prices very quickly.
I don't see you mention FIFO here (a method I totally don't understand as I would think it would be LIFO in reverse, but it isn't).
I wouldn't think specific goods identification would be very practical for a commodity type business - which is what it seems you are talking about. However, given your goal of "How much did I make" I would think specific goods would give you the most accurate picture.
In any case, you pick one method and stick with it. You can't just change or charge off or it distorts your earnings period over period. I'm not sure how or if this impacts your taxes on EVE.
A lot of inventory valuation is making a trade off between your balance sheet and your taxes. Is this really an issue in EVE?
Of course, my knowledge is from the rarified regulated utility arena and probably doesn't really apply to a space MMO at all.
That will teach you to ever say "LIFO" again in any of your posts.
I was thinking of you when I wrote this post, wondering if this would make EVE more interesting to you or making you run away screaming.
Truth is, I have time for one game in my life and, for now, that game is EQ. I don't really want a game that is like work, either. I don't do as much research and reading as I should about EQ as it is. I'm sure I could be much better if I did, but I'd rather spend my game time actually playing the game.
Nice try, though.
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