(03-11-2019, 06:10 PM)xudong Wrote: My question is: if we receive 38 m in one lump sum, all 38m should count as next year's capital gain. if we receive 38 m in 4 installments, 10 m each year, it won't help our next year's financial statement as significantly.
No matter what, if we sell Suso this year, the entire amount he is sold for will show up as a capital gain this summer. Payments can be spread over 4 year as you said (10mil per year), but it doesn't matter.
Revenue (based on accrual basis of accounting) and cash is quite different. The revenue (not really revenue from operations as this will be a capital gain from player sales, but nonetheless it serves the same purpose when it comes to FFP) will be recognized when the player is sold. The cash may, or may not, come right away.
Basically, here is the entry on the books if we sell Suso for a lump sum of 40M:
Cash.............................40mil (cash received)
Accum Amort.................1mil (reversing amount of Asset(Suso) amortized)
Asset (Suso)..................................1mil (amount we paid for Suso)
Gain on Sale..................................40mil (Part that will beef up our bottom line. Or Revenue, if you wanna think of it that way)
Here is the entry on the books if we sell Suso for 10mil cash, plus 3 other installments of 10mil each
Cash...........................10mil
Accts Receivable..........30mil
Accum Amort...............1mil
Asset (Suso)............................1mil
Gain on Sale............................40mil
As you can see, in both cases, we will record a gain of 40 million at the time of sale (assuming that Suso is currently worth zero on the books since his cost was fully amortized which I believe it is). When we receive the cash is irrelevant.
