Heritage and Biological Assets

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According to the Accounting Standards Board (UK, 2006), a heritage asset

was defined as ‘an asset with historic, artistic, scientific, technological, geophysical or

environmental qualities that is held and maintained principally for its contribution to

knowledge and culture and this purpose is central to the objectives of the entity holding it’. It

also has been defined by Canadian Institute of Chartered Accountants (1989) as ‘fixed assets

that a government intends to preserve indefinitely because of their unique historical, cultural

or environmental attributes’. In accordant with the auditor-general of NSW, a common

characteristic of heritage assets is that they cannot be replaced. As UK ASB listed some

heritage assets and with the definitions above, examples of heritage assets are national parks,

national monuments, museum and library collections, and historical buildings and sailing

vessels. Therefore, it is hard to restrict access to heritage assets and the assets have limited

ways of use.

Heritage assets are unique. Main difference is that, unlike assets which are

commonly held by private-sector entities, these assets will never generate significant

cashflows in the future. On the contrary, they are likely to decrease future cashflows in

order to ensure they are maintained at their current value to society. Also, their value is

likely to increase over time and as they age, in contrast with most private sector assets (i.e.

depreciation & amortisation). Moreover, by definition, heritage assets do not exist to produce

wealth to individuals who ‘own’ them while typical assets ‘owned’ by entities usually benefit

the holders of the assets. The difficulties related to determining the appropriate measurement

and disclosure of heritage assets would raise another difference with typical assets that are

held by private-sector entities.

Generally a biological asset is defined as ‘a living animal or plant’. The unique

characteristics of biological assets are as follow:

Ÿ Biological assets have a nature of growing and/or procreating capacities that would directly

effect on the value of the asset.

Ÿ As the assets are greatly influenced by environment such as sun, air and wind, the value and

volume of the assets would be increased.

Ÿ Most costs of the assets would be incurred when the time the assets are acquired.

Ÿ Maturity of the assets (life or growing cycle) normally takes longer period of time than

other assets.

Ÿ Actual expenses for the assets would not respond exactly to the amount. Outcome would

vary depending on the natural circumstances, flooding or droughts for instance.

Roberts, Staunton and Hagen (1995) propose current market value of livestock

should be applied to evaluate biological assets for financial reporting purpose. Moreover,

they insist that only those changes in value because of volume changes need to be treated as


Their recommendations are based on the statement of Roberts (1988) quote: ‘Within

the spirit of the principles of current-cost accounting it is reasonable, true and fair to have the

livestock inventory shown in balance sheet at net realisable value provided that the basis is

stated and that it is verifiable. Such a value is also meaningful and acceptable for expectations

of ratios such as returns on capital employed. It is however, in the area of accounting for

profit that dissensions occur. This is particularly so where breeding, and thus the problems

associated with animated plant and the retention of productive capacity, arises’.

AASB 141, however, does not include or support RSH’s suggestions stating that ‘a

gain or loss arising on initial recognition of a biological asset at fair value less estimated

point-of-sale costs and from a change in fair value less estimated point-of-sale costs of a

biological asset shall be included in profit or loss for the...
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