Question
The Widget Manufacturing Company, which is a start-up, has purchased a computer controlled machine tool to produce its advanced widgets, at a cost of 125,000.
The Widget Manufacturing Company, which is a start-up, has purchased a computer controlled machine tool to produce its advanced widgets, at a cost of 125,000. As it is a start up, it is expected that production will increase as the market for the widget develops and sales increase. The maximum number of widgets that the machine can produce without requiring a complete overhaul and rebuilding is 10,000,000.units. The machine can only be used in the production of widgets and a complete overhaul will cost approximately the same as a new machine. How should depreciation be measured? How would this help a new company? d) Glasgow Celtic Football Club "registers" a new player from another club (often called "buying the player" in the press etc). The transfer fee is 6m (paid to the other club). The player agrees to sign a three year contract. Is the football player an asset of the club? Or is it the contract? What kind of asset is it? Should the 6m be depreciated? If the player is seriously injured and cannot play for a couple of seasons, should the club review the value of the contract? How should this be shown in the accounts?
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