I have a potential new client who is a bookmaker.
Never been involved in this sector before and I need to know how you account for outstanding bets.
Lets say the year end is 31 Mar-13. Lets take two bets that I have tried to make the extremes.
Punter A has staked £500 on his son playing for England at 300:1 before 2020. Do you take £500 to the profit and loss account and ignore the potential liability or account for the bet as a "long term contract". The son will never play for England he only has one leg.
Punter B has bet £1,000 on Manchester United to win the league. The league ends on 19 May-13 but Manchester United are so far ahead, at 31 Mar-13, they really have to be bad to lose the title. Do you recognise the loss in the accounts or do you have to wait until they do win. It is not a known and certain situation at the year end but probable.
No silly football answers, no witty answers about value price(s) etc. Non Bob please.