For each situation below, state whether an asset would be recognised in the balance sheet. If the answer is no, state which of the essential characteristics relating to assets has not been met.

1. Equipment is purchased on credit.

2. Cash is received from a cash sale.

3. A yearly insurance policy is paid in advance.

4. A department store receives goods from a manufacturer on consignment. A consignment is a selling arrangement whereby a company (consignor) ships goods to an agent (the department store), who agrees to sell the goods on behalf of the company for a commission. Under the agreement, title to the goods remains with the consignor until the goods are sold to a third party.

5. Land is donated to a sporting association.

6. A sporting association receives a grant from the local council to build a new tennis court.

7. A patent is purchased using cash.

8. Money is spent on research and development that is unlikely to lead to any new product in the near future, but has the potential to lead to developments in the long term.

9. A company hires a new general manager who has a reputation for increasing profits in her first year with any new employer.

10. BHP shares are purchased for cash.

11. A council swimming pool offers free admission to ratepayers who provide identification.

12. A luxury resort paves a gravel road from the highway to the resort. The road can also be used by others to get to a number of sporting facilities in the area, including a golf course that is not owned by the resort.

13. A new printing press is acquired.

14. A piece of equipment has a written-down value of $100 000, and is no longer used by the company. It has no scrap value.