Question 1

In accordance with AASB 141 "Agriculture" biological assets may be classified as part of property, plant and equipment in the statement of financial position.

Accepted Answer

AASB 141 states that biological assets should be classified separately from property, plant and equipment in the statement of financial position. They should be presented as current assets if they are expected to be converted into cash within 12 months or non-current assets if they are expected to be held for more than 12 months.

Question 2

AASB 141 prohibits the classification of biological assets as current or non-current:

Accepted Answer

AASB 141 does not prohibit the classification of biological assets as current or non-current; instead, it requires biological assets to be classified as either current or non-current based on the entity's normal operating cycle or if they are expected to be realized within twelve months after the reporting period.

Question 3

Biological assets are defined in AASB 141 as 'living animal or plant':

Accepted Answer

According to AASB 141, biological assets are defined as living animal or plant.

Question 4

Unlike heritage assets, there has always been very clear guidance on the treatment of biological assets given their importance in Australia.

Accepted Answer

The treatment of biological assets has evolved over time, and there has not always been clear guidance. The accounting for biological assets, especially in sectors like agriculture, has been complex and subject to interpretation and development in standards such as IAS 41 Agriculture.

Question 5

AASB 141 requires that biological asset be recognised at cost until the asset is sold.

Accepted Answer

AASB 141 requires that biological assets be initially recognized at fair value less estimated point of sale costs. Subsequently, the assets are accounted for in one of two ways: at fair value less estimated point of sale costs, or at cost less accumulated depreciation and any accumulated impairment losses. The chosen method depends on the intended use of the biological asset.

Question 6

According to AAS 29 government departments should put a financial value on their heritage assets for the purpose of disclosure in general-purpose financial reports:

Accepted Answer

AAS 29 requires government departments to disclose their heritage assets and put a financial value on them in their general-purpose financial reports.

Question 7

AASB 101 requires heritage assets to be disclosed separately on the statement of financial position.

Accepted Answer

AASB 101 does not specifically require heritage assets to be disclosed separately on the statement of financial position. The standard requires assets to be presented based on their nature and function within the entity, without mandating a separate classification for heritage assets.

Question 8

An agricultural produce is no longer re-measured to fair value because it is accounted for using the lower of cost or recoverable amount.

Accepted Answer

The answer of An agricultural produce is no longer re-measured...

Question 9

A concern associated with the capitalisation of heritage assets is that it will lead to financial statement users believing that the assets could be readily sold when this is not the case:

Accepted Answer

Capitalisation of heritage assets may increase their value on the balance sheet, leading financial statement users to believe that they have a higher market value and can be easily sold. However, this may not be the case, as heritage assets may have legal restrictions on their use and sale, or may have limited demand in the market. Therefore, it is important for companies to provide adequate disclosure and explanation of the nature and limitations of their heritage assets to avoid misleading financial statement users.

Question 10

Demand for financial information on heritage assets has not been clearly established.

Accepted Answer

There is currently limited demand for financial information on heritage assets and their value has not been clearly established in the market.

Question 11

"Wine" is classified as a processed product of an agricultural produce "grapes" and is still within the scope of AASB 141 "Agriculture".

Accepted Answer

The answer of "Wine" is classified as a processed product...

Question 12

Heritage assets may be defined as intangible assets that a community intends preserving because of cultural, historic or spiritual associations:

Accepted Answer

Heritage assets are typically tangible assets that a community intends to preserve due to their cultural, historic, or spiritual significance. Examples include historic buildings, artworks, and natural landmarks.

Question 13

The requirements of AAS 29 are out of line with one of the views outlined in the International Accord on the Value of Natural Science Collections:

Accepted Answer

AAS 29 requires that natural science collections be valued based on their replacement cost, which is not in line with the view outlined in the International Accord on the Value of Natural Science Collections that emphasizes the importance of the collections for scientific research and education, as well as for their cultural and historical significance.

Question 14

Research has indicated that in general large arts institutions in the English-speaking world value their collections as assets and report them in their financial statements:

Accepted Answer

Most large arts institutions, particularly in the English-speaking world, do not value their collections as assets in their financial statements due to the unique and often priceless nature of the items, along with ethical considerations and accounting standards that discourage or prohibit such practices.

Question 15

Concept of control is problematic for heritage assets but not so for biological assets.

Accepted Answer

The concept of control can also be problematic for biological assets, especially in cases where they are wild or non-captive. For example, a park or wilderness area may have biological assets that cannot be controlled in the same way as a cultivated crop or livestock on a farm.

Question 16

One of the arguments against recording heritage assets as assets in the financial statements is that they typically generate negative net cash flows. SAC 4 argues in response to this that:

Accepted Answer

The answer of One of the arguments against recording heritage...

Question 17

AASB 141 covers agricultural activities such as deep sea fishing.

Accepted Answer

AASB 141 only covers agricultural activities related to plants and animals. Deep sea fishing falls under the scope of other accounting standards, such as AASB 102 Inventories and AASB 138 Intangible Assets.

Question 18

Features common to heritage assets are that they typically:

Accepted Answer

The answer of Features common to heritage assets are that...

Question 19

AASB 141 does not require gains to be broken down into volume changes and price changes as recommended by Roberts, Staunton and Hagen:

Accepted Answer

AASB 141 does not require gains to be broken down into volume changes and price changes as recommended by Roberts, Staunton and Hagen.

Question 20

In order to apply the contingent-valuation method to heritage assets it is necessary to decide whether or not leisure time should be charged at an individual's wage rate:

Accepted Answer

The contingent-valuation method (CVM) primarily focuses on estimating the economic value of non-market resources, such as heritage assets, by surveying individuals about their willingness to pay for the preservation or use of these assets. It does not require assigning a monetary value to leisure time or charging it at an individual's wage rate.

Quiz 9: Accounting for Heritage Assets and Biological Assets