Can a human be an asset for the business

Can a human be an asset for the business - Printable Version

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- Goodman - 12-02-2004

Dear Sajjad

I am content with your treatment of Â£5m transfer fees paid. I have a question which is a slight variation

Suppose Rooney walked in Sir Alex ferguson's office and said, Hey I am a great player. Alex was convinced and he took on Rooney on a weekly wage of say Â£80,000. Now Â£80,000 outlay is a charge to P&L, but obviously no transfer is paid and the guy is an asset and could be sold off for Â£7 million pounds. Is there any way we can recognise this Â£7 Million pounds potential in the B/s.

I tell you why? I have never audited a football club, but I could see a potential tax planning opportunity. The Decpn. charge is notional and would be replaced by capital allownaces in tax comps. Only way we can claim Capital allowances is to recongise the asset, but under histroic cost convention we cant do that. However, what about the situation if we form a Manchester united TRUST (life tenant Trst). The trust signs wyne at no cost and then sells it off to United club, thereby united paying a Â£7Million transfer fees to TRUST on which it can claim capi. allowances. and the trust under an agreements lends the money back to united.

- Goodman - 12-02-2004

Please nobody mention FRS6 here. I know its grey but Tax planning is always a grey area.

- sajjad_dar2000 - 12-03-2004

Vist this link to view the BALANCE SHEET AND PROFIT/LOSS ACCOUNT OF Manchester United, you will notice that the players appeared as an asset in balance sheet

I think its now enough to support my post regarding HUMAN AS AN ASSET. In PROFIT/LOSS ACCOUNT you will see that manchester united showed an entry as DISPOSAL OF PLAYER (Assets).

http//ir.manutd.com/manutd/news/rns/2935442?id=1096264877nRNSa3451D

Since the end of the financial year we completed the acquisition of Wayne Rooney
from Everton. Wayne Rooney is a player whose skills we have admired for a number
of years and his performances at Euro 2004 only increased this interest. Our
plans were to bid for the player in Summer 2005, but Newcastle United's bid and
Everton's subsequent interest in selling him, forced us to accelerate our plans
or risk losing him. As a result we have now spent next summer's transfer budget
unless The net loss on disposal of players in the year was Â£3.1m. During the year we
terminated the contract of the player, Fabien Barthez, requiring a write off of
Â£2.6 million of unamortised intangible asset at the termination date on the 30th
June and a payment of Â£2.5 million in partial compensation for the remaining two
years of his six year contract. In addition, a provision was made against the
carrying value of Diego Forlan of Â£1.9 million at the year end, prior to the
sale of his registration in August 2004. These losses were offset by the sale of
Nicky Butt and further net income totalling Â£2.4 million being recorded in
respect of payments from Real Madrid for David Beckham, (for the progression of
Real Madrid in the Champions League competition), from Chelsea in respect of
Veron (for securing Champions League qualification through finishing second) and
from Blackburn in respect of Cole and Yorke (based on appearances and Blackburn
retaining Premiership status). players are disposed of to realise cash for re-investment. (taken from above link)

just look at the bottom part of this Consolidated Cashflow Statement, you would see Manchester United accounted players as a capital exopanditure.

MANCHESTER UNITED PLC
CONSOLIDATED CASHFLOW STATEMENT
For the year ended 31 July 2004
Notes
2004 2003
Â£'000 Â£'000

Net cash inflow from operating
activities 58,769 57,939
------- ------
Returns on investments and servicing of
finance
Interest received 1,169 316
Interest paid (112) (167)
------- ------
Net cash inflow from returns on
investments and servicing of
finance 1,057 149
------- ------
Taxation paid (11,052) (10,602)
------- ------

Capital expenditure and financial
investment
Proceeds from disposal of players'
registrations 8c 16,009 11,122
Purchase of players'
registrations 8c (44,813) (18,983)

Regards

Sajjad Dar

Edited by - sajjad_dar2000 on Dec 02 2004 110926 PM

Edited by - sajjad_dar2000 on Dec 02 2004 112041 PM

- Mr. Whappaaaa - 12-03-2004

hmmmmmm ... STRANGE .
discussion is going on well... i think , in my point of view( may be i am wrong) that HUMAN may be an asset or employee of the organization, based on the judgement and definition of asset.But in this example( mentioned by sajjad ),HUMAN will be treated as an asset. SAM .... u said that asset must be owned, tu yes dear asset must be owned in that example but the life of this asset(ROONEY) is just five yrs(according to the length of agreement)..Simply assets are the Revenue generating product. If Manchestor dont agree to ROONEY then perhaps future economic benefit will not flow to the enterprice by Grounds,Buildings,Material or whatever u mentioned ... agree..??
<BLOCKQUOTE id=quote>quote<hr height=1 noshade id=quote>Now if You just take the example of Football Players they wont be Assets of the Enterprise (club or team)they would be considered as Employees and the money they take for the YEARS period would be considered as Prepaid Salary Expense, that would certainly become expense with the period of time.<hr height=1 noshade id=quote></BLOCKQUOTE id=quote>

further more .. would u like to define me that what is the nature of PREPAID SALARY ....???????
chalo .... theek hai maan liaa k it is prepaid salary .. but this prepaid salary is considerd to be as a LONG TERM ASSET.

ASIF ALI

- sajjad_dar2000 - 12-03-2004

<BLOCKQUOTE id=quote>quote<hr height=1 noshade id=quote>
Yes ofcourse Prepaid Salary would be Asset .
<hr height=1 noshade id=quote></BLOCKQUOTE id=quote>
<BLOCKQUOTE id=quote>quote<hr height=1 noshade id=quote>
We are considering Football players here in terms of Accounting Lanuage right... ? or r we considering them in General English Language
<hr height=1 noshade id=quote></BLOCKQUOTE id=quote>

<img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle><img src=icon_smile_big.gif border=0 align=middle>

sam bahi kia mai nai kuch gulaat kahaa thaa ya kuch diffrent kahaa thaa.....topic was same CAN A HUMAN BE AN ASSIT? and my answer was yes and you wansnt agree.........

Sajjad Dar

- sajjad_dar2000 - 12-03-2004

THANK MR ASIL ALI for your support.

Goodman please visit following link hope it will work

http//ir.manutd.com/manutd/news/rns/2935442?id=1096264877nRNSa3451D

Sajjad Dar

Edited by - sajjad_dar2000 on Dec 03 2004 010546 AM

- Goodman - 12-03-2004

Hey Sajjad

Please read my post carefully, I am trying to bring out a different issue and see if you can help answer that issue.

- sajjad_dar2000 - 12-03-2004

<BLOCKQUOTE id=quote>quote<hr height=1 noshade id=quote>
Hey Sajjad

Please read my post carefully, I am trying to bring out a different issue and see if you can help answer that issue.

<hr height=1 noshade id=quote></BLOCKQUOTE id=quote>

Sorry Goodman i am not that good to reply your post. Your post show that you are well qualified and experience person and if you canât solve this issue than how can I?

Regards Sajjad Dar

- Goodman - 12-03-2004

Hi Sajjad

I might be slightly more experienced than you are, but honestly reading your post this question crossed my mind and I thought you might be in a position to discuss it with your teacher. I know for sure that London teachers are partners of well established firms and we might have their opinion on this treatment. Anyhow if you do discuss please let me know or i come to know i will pass on the info. to you.
take care

- sajjad_dar2000 - 12-03-2004

<BLOCKQUOTE id=quote>quote<hr height=1 noshade id=quote>
Hi Sajjad

I thought you might be in a position to discuss it with your teacher. I know for sure that London teachers are partners of well established firms and we might have their opinion on this treatment. Anyhow if you do discuss please let me know or i come to know i will pass on the info. to you.
take care

<hr height=1 noshade id=quote></BLOCKQUOTE id=quote>

Hi GoodMan,

I am not going to college these days because we are at end of our ACCA semester and preparing myself for exams. I have taken out the print of your post and as soon as I join the college I would discuss it to my teacher then let you know.

Regards,

Sajjad Dar

Edited by - sajjad_dar2000 on Dec 03 2004 52049 PM

- smraza - 12-04-2004

While looking at the topic and the link of the footbal club's accounts, i got confused.
In the fin.statements of the club, there is no selling or purchasing of players, but the player's registerations, that is why the club has shown all the player's registerations as Intangible assets.
Therefore in my opinion, the human is the asset for the business due to his skills which he possess.

Why should we pick the example of any other country, just pick any financial statement of any company incorporated in pakistan. (Preferably those financial statements where u can see 'Operating lease')
Now look at the head 'Salaries and other benefits', in my opinion the payments in this head can be considered as "Lease Rental" for the use of assets. But the difference is that we cannot determine the total value and useful life of 'Human', thats why we cannot have the purchase option at the end of lease period.

SMR

- syedhassan - 12-04-2004

hi all...
lovely discussion.....
i , also studied the balencesheet well.....

sure, there is a treatment as ASSETS for players, its correct<img src=icon_smile_wink.gif border=0 align=middle><img src=icon_smile_wink.gif border=0 align=middle>
as we can see assets disposal,historic cost,

but i think the club treated CONTRACTS with players, as the ASSETS.....as, no purchasing of selling of prayers is clear...
SMRAZA if right here....

and the TREATMENT OF ASSETS, ALSO DEPENDS ON NATURE OF BUSINESS....
(WHAT ARE THE GOODS FOR A CO.\CLUB\PLC ETC.....

and each contract has...
-NBV
-disposal value
-duration and LIFE..
-HISTORIC COST...
REGARDS..
SYEDHASSAN...



ACCA

- syedhassan - 12-04-2004

<BLOCKQUOTE id=quote>quote<hr height=1 noshade id=quote>
hi all...
lovely discussion.....
i , also studied the balencesheet well.....

sure, there is a treatment as ASSETS for players, its correct<img src=icon_smile_wink.gif border=0 align=middle><img src=icon_smile_wink.gif border=0 align=middle>
as we can see assets disposal,historic cost,

but i think the club treated CONTRACTS with players, as the ASSETS.....as, no purchasing of selling of prayers is clear...
SMRAZA if right here....

and the TREATMENT OF ASSETS, ALSO DEPENDS ON NATURE OF BUSINESS....
(WHAT ARE THE GOODS FOR A CO.\CLUB\PLC ETC.....

and each contract has...
-NBV
-disposal value
-duration and LIFE..
-HISTORIC COST...
IN SHORT...
HUMANS ARE ASSESTS, BUT NON-ECONOMIC
AND...CAN BE ECONOMIC, BUT IT DEPENDS ON BUSINES NATURE.
REGARDS..
SYEDHASSAN...



ACCA
<hr height=1 noshade id=quote></BLOCKQUOTE id=quote>

ACCA

- the_farhan - 12-04-2004

<BLOCKQUOTE id=quote>quote<hr height=1 noshade id=quote>
Therefore in my opinion, the human is the asset for the business due to his skills which he possess.
<hr height=1 noshade id=quote></BLOCKQUOTE id=quote>

i agree with this point. in fact, i ve tried to raise this point in my reply earlier. but i think it was not ellaborate enough. my point is tht human beings/ employees/ (HR) generate revenues for the company by their skills. they shud b treated as intangible assets. they r not just like other assets or like equipment or machines. these all r dumb. but human assets r intelligent assets.

one more thing tht i ve noticed is tht most of the ppl, even the most senior members, r taking this issue just in perspective of accounting. ie, the accounting treatments, the financial stmt. representations etc etc. i believe tht there is a lot more to businesses thn just accounting. it takes lot more to become successful business leader.

so i invite all the members, specially the experienced mmbr to whom v all look for suggestions, to view this issuse from other dimensions as well. i beleive tht, whatever way the accounting principles treat the human beings, human assets r infact one of the most important FACTOR for any company. now, call this FACTOR as an asset, or whtever name, but the underlying truth shall remain unchanged.



FARHAN

live, n let live ...

- syedhassan - 12-05-2004

hi there...
what i meant was that...
its a vast and elaborate issue.....
as it depends on factors like-
-business nature.
-contract nature
-its terms (long term etc.)
and then..
-the IAS's and POLICY govering them....for treatment
purposes.
so, here two issues and the FIRAT one must be
considered firs or in PREFERENCE to the other..
regards,..
syedhassan..

ACCA