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Topics: Contract, Lease, Asset Pages: 2 (650 words) Published: July 28, 2014
Are the following assets? If so, whose assets, and why?
(a)Members of the Australian hockey team
(b)A 9-month lease agreement to rent a business office
(c)Expenditure on research and development
(d)An unsigned, documented contractual agreement to build specialised equipment for a client (e)A building bequeathed to a firm
(f)A 5-year option to acquire property, where the option was purchased by the company a year ago

(a)Human resources arguably meet the definition of assets of the Australian government, or the Australian Institute of Sport (depending upon whether it is accepted that they can be controlled to act in the interests of the reporting entity). However, even if they are regarded as meeting the definition, because of the difficulty of placing a value on them they are not recognised. (A question to debate in class is: If the team is on a losing streak, are the players still assets? As long as they generate future economic benefits, they remain assets whose measurement and probability may not warrant capitalisation as assets.) (b)Operating lease. For the lessee (tenant), the future benefits that he or she has control over are the benefits under a contract specifying the rights to benefits, e.g. the right to use a motor vehicle for a month. According to AASB 117, there is no intent by the lessor to transfer substantially all ownership benefits and risks to the lessee. Nonetheless, once a contract is in place there is a right to control the inflow of economic benefits, and an obligation to pay for them. As such, both an asset and a liability do exist under the Framework definitions. (c)Research and development. AASB 138 does not allow intangible assets arising from research phase to be recognised by the firm paying for the R&D, as the existence of intangible assets that will generate future economic benefits cannot be demonstrated. AASB 138 only allows intangible assets arising from development to be recognised if the technical feasibility...
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