However, if, from the terms of the contract, separate services can be identified and measured reliably, Minco should allocate the costs and recognise expenses once the separate service is rendered.
#Michael minco full#
The signing bonus relates to the full contract term and a prepayment of $20,000 is recognised on commencement and is expensed on a straight line basis over the three-year contract period. In return, the player is obliged to advertise Minco and take part in photo/film sessions.
The signing bonus of $20,000 is paid to the player on commencement of the contract. Therefore, in accordance with IAS 38 Intangible Assets, the costs must be expensed when the entity has received the service.Īny amounts paid in advance of the service being received are recognised as prepayments and expensed when that service is received. The contract relates to advertising and promotional expenditure to improve Minco’s brand image by the tennis player. The different payments are not interrelated. In return, the player is required to wear advertising logos on tennis apparel, play a specified number of tournaments and attend photo/film sessions for advertising purposes. If the player wins a major tournament, she receives a bonus of 20% of the prize money won at the tournament.
The agreement is that the player receives a signing bonus of $20,000 and earns an annual amount of $50,000, paid at the end of each year for three years, provided that the player has competed in all the specified tournaments for each year.
At the moment, It has a three-year agreement with a tennis player who is currently ranked in the world’s top ten players. Minco often sponsors professional tennis players in an attempt to improve its brand image.
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