An Asset?!

spurschic1@yahoo.com

Hi all,

One of our clients own a box at the O2 arena, how would I class this on the accounts?

Thanks in advance!

Monsoon

Nice!

Owns the box, or owns the rights to use the box for a period of time?
I don't know the answer either way offhand, but this might help you work it out?

spurschic1@yahoo.com

They own it for a period of time if this helps?

groundy

This would be advertising or entertainment, depending on the usage of the box

spurschic1@yahoo.com

If this is an expense rather than an asset would I then post a prepayment as it covers a period in the future?

LynWest

If it does not all relate to the financial year of the accounts being produced i would post a prepayment.

PGM

LynWest wrote: »

If it does not all relate to the financial year of the accounts being produced i would post a prepayment.

I don't think you can.

Certain expenses were you're not guaranteed a return can't be prepaid, we had this problem with marketing brochures, we spent £10k on them right before year end, obviously nearly all still in stock, auditors wouldn't allow us to treat them as an asset or prepay them.

deanshepherd

Different scenario to brochures.

Presumably they don't own the physical box, just a right to use it for events and that right extends beyond the year in question.

Is it a lease? How long?

PGM

deanshepherd wrote: »

Different scenario to brochures.

Could you expand on it please Dean, the principle behind the brochures I get, but knowing where you draw the line?

Is it because you haven't yet received the service of using the box? They're both a sunk marketing cost with no gauranteed returns.

deanshepherd

Rights to use a corporate box extend over a period of time. More like leasing an office than buying brochures.

PGM

deanshepherd wrote: »

Rights to use a corporate box extend over a period of time. More like leasing an office than buying brochures.

Ah right, thanks.