Practice Question 4

Manchester United Football Club acquires a player, Wayne Rooney from Everton. The contract is for five years at the end of which, he is free to leave the club. During the five years Manchester United Football Club can transfer him to other clubs. Unfortunately, during the first six months of year 2016, Wayne Rooney could not play due to a knee injury.

During year 2016, the club incurred the following costs:

RM

a) Transfer fees 5,000,000

b) Operational costs 2,000,000

c) Medical cost of Wayne Rooney 500,000

d) Massive advertising campaign to launch the player 1,000,000

Required:

Which of the above items is cost that can be capitalised as an intangible asset?