Atlanta Falcons owner Arthur Blank has invested $15 million in a local job training program as part of a deal to build Atlanta’s new football stadium in Westside Atlanta, one of the city’s poorest neighborhoods.
Question: Discuss whether the $15 million contribution made by the investors to 'Westside Works' should be capitalized as part of the cost of the stadium? Note that one of the requirements, for the investors to obtain approval for construction of the stadium, was that they contribute $15 million dollars to the 'Westside Works' free job training program.
YES.The $15 million contribution made by the investors to 'Westside Works' should be capitalized as part of the construction cost of the stadium--- |
as the payment /participation in developing the poor neighbourhood , is the main pre-condition for the football stadium , to come into existence.So, it is to be treated as part of the construction expenditure , capitalised & depreciated , as any other capital asset. |
The benefit of the asset, namely the football stadium is going to be felt beyond the current accounting year & the year of finishing consruction, the approval for which itself, is dependent on the payment of the above referred $ 15 milions for the free job training programme. |
Hence, it follows that the $ 15 million , is part of the capital expenses for the stadium. |
Atlanta Falcons owner Arthur Blank has invested $15 million in a local job training program as...
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