Yes that’s right

It’s about how the asset is consumed.

The asset being the transfer fee paid that is recognised on day 1 and written off over the player’s contract.

You match accounting expenses with how that asset is used. Normally we use players by playing them and match the expense of the transfer fee against that. Hence the write off over time approach.

However, for Naismith, Martin and wildschut, they aren’t going to play for us again so it’s not appropriate to recognise the asset any more, and nor is it appropriate to recognise an expense in 2018 / 19 for their consumption; they’ve already been fully consumed.

So the transfer fee is written off in full and the remainder of their contract is recognised as an expense immediately.

As we pay the cash, the other side of the accounting entry is the reduction of the onerous contract liability.

Posted By: SimonOTBC on October 24th 2018 at 12:24:58


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