Home For AAT student members AQ 2013 AAT Level 2 (Level 5 in Scotland)

Can an Individual be classified as an Asset?

Brownie3Brownie3 Feels At HomeRegistered Posts: 45
I remember a longtime ago now, in my first AAT class (Prior to it been called BA1) my teacher was
Discussing Asset categorization, i.e. Non-Current (Fixed) such as Property, Vehicles & Fixtures/Fittings
etc, and Current been Cash, Inventory and Debtors.

I raised at the time that surely an Individual, a person, should be an Asset, I was told at the time no!
However, how does say a football club record the fact that its players have a value, there tangible, so
Surely they can/have to be valued on the Balance sheet/Statement of financial position.

I appreciate that it must be difficult to 'Value' such an Asset, how much a person is worth is strictly
speaking dependant upon how much somebody is prepared to pay, you might get a book value for a
Company Car, but a person is very different.

So how does Barcelona value Messi on there balance Sheet?



  • uknittyuknitty Experienced Mentor Registered Posts: 591
    I would hazard a guess that the individual themselves cannot be classed as an asset as you can't really wholly and exclusively "own" a person, you could however own a contract for their services.

    In your example of a football club I'd suggest that possibly the contract for the player's exclusive services could be shown as an intangiable asset, so the value of the player's contract may be shown on the balance sheet, as this is something that could be "sold" to another club should a transfer take place.

    Thinking about it logically there has to be a double entry when the "purchase" of the player takes place. So clearly we credit the bank the corresponding debit has to go somewhere, which I would guess would be some class of intangiable asset on the balance sheet.

    ETA: I don't think that the associated costs of completing the contract to purchase the player could be capitalised - they would have to be charged to the income statement.
  • MarieNoelleMarieNoelle Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,433
    I'm sure we discussed this at college when studying Financial statements.

    This is what I found in the notes to the financial statements of Manchester United F.C.:

    "Intangible fixed assets
    The costs associated with the acquisition of players’ registrations are capitalised as intangible fixed assets. These costs are fully amortised over the period covered by the player’s initial contract."

  • Brownie3Brownie3 Feels At Home Registered Posts: 45
    It's interesting, but IAS38 - Intangible Assets, defines an Intangible Asset as 'An identifiable non-monetary asset without physical substance'

  • uknittyuknitty Experienced Mentor Registered Posts: 591
    I'd argue that the player's contract is identifiable, as the associated costs of acquiring the player can be clearly identified. It is also separable as the contract for services can be sold on to another club.

    Looks like footballers CAN be capitalised on the balance sheet.

    See this article for discussion

  • mrb82mrb82 Well-Known Registered Posts: 147
    Best person to ask would be the finance manager of a football club.

    Here's Aston Villa:

    "We do, as you suggest treat players as an asset. The cost of acquiring a player can be made up of many components. These include the transfer fee itself and agents fees. The costs are capitalised and included as intangible fixed assets. These costs are then depreciated or ‘amortised’ over the length of the players contract. The amortisation charge reduces the value of the asset and creates a charge in our profit and loss account. As an example if we purchase a player for £1m on a 4 year contract we would have an amortisation charge of £250k per year. At the end of year 1 he would have an asset value of £750k. At the end of year 4 he would have a value of nil.

    If a player signs a contract extension we would amortise the remaining asset value of that player over the length of the new contract."
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