UK Curious about an aspect of amortisation of Intangible Assets

Sep 9, 2019
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United Kingdom
Hi all.

Cards on the table- this is kinda a football related transaction type question albeit relating to Intangible assets and perhaps I'm badly wrong- may well be!

In effect, footballers are classed as "Intangible Assets" and are amortised over the life of their contract- extensions can adjust this and so on.

IF a player is sold in the final year of the contract for less than their remaining Net Book value- say a £4m fee at £1m per year, and they are given a free transfer, then that is a loss on disposal of £1m- that I get...

...However is there not a counterbalance that crucially goes through Profit and Loss too, which means that as the asset leaves- given it is the final year- the remaining amortisation is removed on disposal and this cancels out the loss on disposal- £1m of amortisation costs removed on disposal therefore the net effect is Loss on Disposal - Cost Saving=£0 or Cost Saving - Loss on Disposal=£0.

Any answers much appreciated- thanks!


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