Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     General — We have prepared these unaudited condensed consolidated interim financial statements according to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, we have omitted certain information and footnote disclosures that are normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP). The December 31, 2010 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. These interim financial statements should be read in conjunction with the financial statements, accompanying notes and other information included in our Annual Report on Form 10-K for the year ended December 31, 2010.

     The accompanying unaudited condensed consolidated interim financial statements reflect all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the financial condition and results of operations and cash flows for the periods presented. The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities, as well as the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our actual results could differ from those estimates. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the entire year.

     Certain 2010 amounts have been reclassified to conform to the 2011 presentation.

• On our condensed consolidated balance sheet, we have reclassified and presented as a separate line item accrued interest payable, which was previously included with accrued expenses;

• As a result of the sale of our Blue Harbor Resort, we have included the operations and gain on sale of this resort in discontinued operations in our condensed consolidated statements of operations; and

• On our condensed consolidated statement of cash flows, we have reclassified the change in escrows to present them as a part of the change in restricted cash, where before we presented that change in escrows as a separate line item.

     Principles of Consolidation — The accompanying condensed consolidated financial statements include all of the accounts of Great Wolf Resorts, Inc. and our consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements.

     Goodwill — The excess of the purchase price of entities that are considered to be purchases of businesses over the estimated fair value of tangible and identifiable intangible assets acquired is recorded as goodwill. We are required to assess goodwill for impairment annually, or more frequently if circumstances indicate impairment may have occurred. We assess goodwill for such impairment by comparing the carrying value of our reporting units to their fair values. We determine our reporting units’ fair values using a discounted cash flow model.

     In connection with the acquisition of the majority interest in Creative Kingdoms, LLC (CK) in 2010 we have recorded $1,366 of goodwill. Goodwill is included within intangible assets on our condensed consolidated balance sheet.

	June 30,		December 31,
	2011		2010
Goodwill related to the acquisition of the majority interest in CK	$	1,366	$	1,366
	$	1,366	$	1,366

     Noncontrolling Interests — We record the non-owned equity interests of our consolidated subsidiaries as a separate component of our consolidated equity on our condensed consolidated balance sheet. The net earnings attributable to the controlling and noncontrolling interests are included on the face of our statements of operations. Due to our acquisition of CK in 2010 we have a consolidated subsidiary with a noncontrolling interest.

     Discontinued Operations — We record the results of the operations of an entity that has been disposed of as a discontinued operation in the consolidated statements of operations when the operations and cash flows of the entity have been eliminated from the ongoing operations and we do not have any significant continuing involvement in the operations of the entity after the disposal transaction. During the three months ended March 31, 2011 we disposed of our Blue Harbor Resort property and have included that property’s operations and gain on sale in discontinued operations for all periods presented. The operations of Blue Harbor Resort were formerly included in our Resort Ownership/Operation segment.

     Income Taxes — At the end of each interim reporting period, we estimate the effective tax rate expected to be applicable for the full fiscal year. We use that estimated effective tax rate in providing for income taxes on a year-to-date basis. We account for the tax effect of significant unusual or extraordinary items in the period in which they occur. We account for major changes in our valuation allowance within continuing operations in the period in which they occur. During the six months ended June 30, 2011, we increased our valuation allowance by $4,772 as a result of the sale of our Blue Harbor Resort in Sheboygan, Wisconsin. The increase was due to uncertainties related to our ability to utilize some of our deferred tax assets generated as a result of that sale, primarily consisting of certain net operating loss carryforwards, before they expire.

     Segments — We are organized into a single operating division. Within that operating division, we have two reportable segments:

• Resort ownership/operation-revenues derived from our consolidated owned resorts; and

• Resort third-party management/licensing-revenues derived from management, license and other related fees from unconsolidated managed resorts.

The following summarizes significant financial information regarding our segments:

				Resort
	Resort			Third-Party					Totals per
	Ownership/			Management					Financial
	Operation			/License		Other			Statements
Three months ended June 30, 2011
Revenues	$	67,208		$	7,366	$	1,151		$	75,725
Depreciation and amortization		(12,554	)		—		(761	)		(13,315	)
Net operating income (loss)		3,606			1,679		(391	)		4,894
Investment income — affiliates		—			—		—			(220	)
Interest income		—			—		—			(51	)
Interest expense		—			—		—			12,108
Loss from continuing operations before income taxes and equity in income of unconsolidated affiliates		—			—		—		$	(6,943	)
Additions to long-lived assets		4,367			—		106		$	4,473

				Resort
	Resort			Third-Party					Totals per
	Ownership/			Management					Financial
	Operation			/License		Other			Statements
Six months ended June 30, 2011
Revenues	$	130,461		$	14,683	$	2,466		$	147,610
Depreciation and amortization		(25,038	)		—		(1,525	)		(26,563	)
Net operating income (loss)		7,843			3,435		(2,637	)		8,641
Investment income — affiliates		—			—		—			(462	)
Interest income		—			—		—			(106	)
Interest expense		—			—		—			24,205
Loss from continuing operations before income taxes and equity in income of unconsolidated affiliates		—			—		—		$	(14,996	)
Additions to long-lived assets		4,962			—		212		$	5,174
Total assets		620,802			1,719		121,949		$	744,470

				Resort
	Resort			Third-Party					Totals per
	Ownership/			Management					Financial
	Operation			/License		Other			Statements
Three months ended June 30, 2010
Revenues	$	58,605		$	7,132	$	868		$	66,605
Depreciation and amortization		(16,324	)		—		(694	)		(17,018	)
Net operating income (loss)		(1,444	)		1,518		(268	)		(194	)
Investment income — affiliates		—			—		—			(276	)
Interest income		—			—		—			(178	)
Interest expense		—			—		—			11,997
Loss from continuing operations before income taxes and equity in income of unconsolidated affiliates		—			—		—		$	(11,737	)
Additions to long-lived assets		1,961			—		487		$	2,448

				Resort
	Resort			Third-Party					Totals per
	Ownership/			Management					Financial
	Operation			/License		Other			Statements
Six months ended June 30, 2010
Revenues	$	120,382		$	14,198	$	868		$	135,448
Depreciation and amortization		(30,305	)		—		(859	)		(31,164	)
Net operating income (loss)		(517	)		3,174		(2,439	)		218
Investment income — affiliates		—			—		—			(565	)
Interest income		—			—		—			(430	)
Interest expense		—			—		—			21,104
Loss from continuing operations before income taxes and equity in income of unconsolidated affiliates		—			—		—		$	(19,891	)
Additions to long-lived assets		5,790			—		439		$	6,229
Total assets		685,381			3,565		116,926		$	805,872

     The Other column in the table includes items that do not constitute a reportable segment and represent corporate-level activities and the activities of other operations not included in the Resort Ownership/Operation or Resort Third-Party Management/License segments. Total assets at the corporate level primarily consist of cash, our investment in affiliates, and intangibles.

     Recent Accounting Pronouncements — In July 2010, the FASB issued guidance on disclosures about the credit quality of financing receivables and the allowance for credit losses. The guidance requires new disclosures that will require companies to provide more information about the credit quality of their financing receivables in the disclosures to the financial statements including, but not limited to, significant purchases and sales of financing receivables, aging information and credit quality indicators. This guidance is effective for interim or annual financial reporting periods beginning after December 15, 2010. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

     In December 2010, the FASB issued guidance which (1) does not prescribe a specific method of calculating the carrying value of a reporting unit in the performance of step 1 of the goodwill impairment test and (2) requires entities with a zero or negative carrying value to assess, considering certain qualitative factors, whether it is more likely than not that a goodwill impairment exists. If an entity concludes that it is more likely than not that a goodwill impairment exists, the entity must perform step 2 of the goodwill impairment test. This guidance is effective for impairment tests performed during fiscal years (and interim periods within those years) that begin after December 15, 2010. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

     In December 2010, the FASB issued guidance to address differences in the ways entities have interpreted disclosures about pro forma revenue and earnings in a business combination. This guidance states that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This guidance is effective prospectively for business combinations whose acquisition date is at or after the beginning of the first annual reporting period on or after December 15, 2010. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

     In May 2011, the FASB issued guidance that clarifies and changes the application of various fair value measurement principles and disclosure requirements. This guidance is effective for interim and annual periods beginning after December 15, 2011. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.