Financial Accounting - The directors of Manchester Football Club Limited

Financial Accounting

The directors of Manchester Football Club Limited are arguing over whether player registrations can be recognized as assets on the club’s statement of financial position. There are two group of players. The first group consists of those players bought in by the club from other teams through the transfer market. The second group is made up of players who have come up through the youth scheme and who have been playing at various levels for the club since the age of 12. The accounts department has informed the directors that the transfer fees for the bought in players amount to $25m. The directors, however, cannot agree on a valuation for the players that have been developed by the club. The managing director thinks these players should be valued at $30m, while the finance director thinks this is far too high a figure and would value these players at $15m. Various offers have been received from other clubs to sign the players developed by the club and the combined values of these offers have ranged from $10m to $25m.