10.10 Assets and asset recognition For several seasons, Megan Gale and Jennifer Hawkins have been employed...

10.10 Assets and asset recognition

For several seasons, Megan Gale and Jennifer Hawkins have been employed by David Jones Limited and Myer Limited respectively in order to attract more fashion-conscious customers to their stores. This strategy has met with some success and their continued employment at fashion events in the future for their respective companies appears assured.

Required : Discuss whether Megan Gale and Jennifer Hawkins should be regarded as assets of David Jones Limited and Myer Limited respectively. Discuss also whether they should be recognised on the statement of financial position/balance sheet of the respective companies as assets.

Expert Solution

Previously human capital was included on balance sheets because of slavery; as a slave you can and would be the part of the balance sheet, just as farms currently pigs, include cows, chickens, etc. on company's balance sheet. Currently it is not legal to own people, thus not allowed for a company to have people as legal assets. Humans are intangible assets; however cannot be owned and do not depreciate.

For an asset investment to appear on the balance sheet it need to fulfil four conditions:

--It must be defined and separate from other assets

--The company is in a position to control (own) the asset and be able to transfer that control

--Any impairment of the asset’s value can be determined

--It should be possible to predict future economic gains of an asset

According to above conditions, intangible assets do not appear on the balance sheet. Thus Megan Gale and Jennifer Hawkins are intangible asset however cannot be regarded as assets on the balance sheet

ekkarill92 answered 1 year ago

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10.10 Assets and asset recognition For several seasons, Megan Gale and Jennifer Hawkins have been employed...

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