Player:Saliba
lets say that instead of selling the player in his final year, we manage to extend his contract and keep him.
then, his value on the balance sheet (i.e intangible assets) will go up by the sum total of his new wages over the length of his new contract. this amount will then get amortized on a straight-line basis.
why is this a problem? the player's new value on the balance sheet reflects wages ONLY and is not a reflection of the player's fair value on the market (remember that when we first bought him, his balance sheet value reflected the transfer fee and his wages). therefore, any amortization based on this new value is purely cosmetic and, frankly, out of touch with the reality of the situation.
similarly, any income statement "profit" we make when we eventually sell the player will again be a function of the player's misstated balance sheet value.
overall, the income statement gets thrown out of whack quite hard.
So why is it all done this way?