Club Membership?

[rogerwilco]

Reading the balance sheet (Consolidated statement of financial position) of some companies, i often found "Club Membership" listed as one of the companies non current asset (example can be found on Japan Foods Holdings Q3-2012 financial announcement).

Could anyone please share what exactly is "Club Membership" ? is it a trade association membership? why is it categorized as company asset?

Thanks!

[valueinvestor]

Social clubs, Golf clubs, swimming clubs ,etc....

[rogerwilco]

Investopedia explains 'Asset'
Assets are bought to increase the value of a firm or benefit the firm's operations. You can think of an asset as something that can generate cash flow, regardless of whether it's a company's manufacturing equipment or an individual's rental apartment

Social clubs, Golf clubs, swimming clubs ,etc....

So social/golf/swimming/horseriding/etc club membership are beneficial for firms operation and generate cash flow?

BTW, IRA (Inland Revenue Authority of Singapore) also has club membership listed as one of their non current asset
(source: Financial Report IRAS, see note 2.6)

[KopiKat]

My guess is it's an SICC Corporate membership based on the figure.

Most Japanese are crazy over golf.... it's like part of their corporate culture to golf, entertain... etc. The real biz deals are usually not sealed during formal meetings but in more informal settings... I guess the Japanese founder will be better able to get better discounts and commitment from his Japanese suppliers in this manner... So ya, it's an asset...

PS. JFood is in my watch list as I enjoyed dining at some of their restaurants, but unfortunately, it's usually very illiquid. Yesterday's good results has resulted in a +15.2% jump in share price today...

[rogerwilco]

KopiKat, why don't they put the entrance fee under selling and distribution/administrative/other expense? is it because the membership can be sold later for profit?

nevertheless, i am quite happy with jfood stock performance so far...

[KopiKat]

KopiKat, why don't they put the entrance fee under selling and distribution/administrative/other expense? is it because the membership can be sold later for profit?

Club memberships are a bit like shares, the clubs don't issue it in unlimited numbers as the premises will not be able to accomodate all. So, if, say, you want to join SICC, you'll have to buy it from an existing member who doesn't want to be part of the club anymore.

So, yes, there's actually a market value for the Club Membership. The price is very much dependent on supply and demand and usually, on the state of our economy ie. Economy bad, price drops...

There are actually people out there who makes $$ from trading in Club Memberships. But, there's a large transfer fee (to be paid to the club) imposed on the seller, so, it's not that lucrative. These people usually doubles as Membership Brokers ie. they earn a commission from both sellers and buyers by 'helping' both parties.

Hee... I used to think I could make $$ by 'investing' in Club Memberships when I was younger...

[CityFarmer]

To add-on

Even for non-transferable club membership, it will still be accounted as asset in balance sheet if it is a prepayment and un-consumed service.