Corporation Tax Act 2009 section 1217BA

Calculation of profits or losses of separate video game trade

Section 1217BA sets out how to calculate the profits or losses of a company's separate video game trade for each accounting period, using a cost-based method to recognise income progressively as expenditure is incurred.

• Profits and losses of the separate video game trade are computed by matching costs incurred against a proportionate share of estimated total income
• In the first accounting period, the costs incurred to date are brought in as a debit and a calculated proportion of estimated total income is brought in as a credit
• In subsequent periods, only the incremental movement in both costs and the proportion of estimated income (compared with the previous period) is recognised
• The proportion of estimated total income treated as earned at the end of any period is found by dividing costs incurred to date by estimated total cost, then multiplying by estimated total income