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    Are players capital assets of professional sports franchises

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    You're the owner of a professional sports franchise. Are your players capital assets? Why or why not? How would you account for their compensation?

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    Solution Preview

    No, players are not capital assets because the franchise does not own the players, but their contracts are. After signing a contract with a player, the general treatment is to record the value of the contract as an asset and book the corresponding liability. Terms of the contract would have to be reviewed to determine whether either the ...

    Solution Summary

    The solution explains treatment of players and their contracts on the financial statements of sports franchises, plus some newer developments in reporting.