Music company

Thank you in advance for any guidance on this subject.

I've been asked to prepare the CT returns for a music production company and need some guidance on the accounting treatment of certain expenditure. I am a tax adviser, not an accountant, so will be getting someone to prepare the accounts and then I will look at the tax, but I'd like to canvass readers' views in advance.

Basically the company is a vehicle for a singer to launch himself. He has contributed funds to the company (by way of loan) and the company has produced an album which is it now selling.

There are various costs - some admin (postage, printing etc); some marketing (a reception was held to launch the album to the media); costs of pressing the CDs and producing the cases; and the costs of recording the master CD (writing orchestrations, musicians' costs, sound engineers, mastering, studio time, conductor's fee etc).

In my perhaps over simplified non-accountant mind, I would have thought that the admin costs and marketing costs would be expensed to P&L, the costs of pressing the CDs will be recorded as additions to stock, and the cost of recording the master will be a capital cost, held as an asset on the balance sheet.

Presumably the capitalised master CD cost can be depreciated, over its useful life.

Do readers have any views on whether this is the right approach, and also on what period over which to depreciate the master CD asset? In theory it lasts forever, but in practice it may have a limited shelf life and only be generating income for maybe 2 years or so.

Any views appreciated.

Thanks.