(a) A vintner buys two casks of wine at £50 each. One he sells for £75, and the other, remaining in hand, has a market value of £80. Is it acceptable for him to capitalise (i.e. to report as an asset in the Statement of financial position) the unsold cask at £80 and to report the cost of the one sold at £20, i.e. after removing £80 from purchases of £100?

(b) The Trusthouse Forte group explains their failure to depreciate buildings as follows:

(i) Their buildings are maintained in a continual state of sound repair by making renovations and building extensions.

(ii) The life of the building is so long that annual depreciation becomes immaterial.

(iii) The residual values of buildings after adjusting for the impact of inflation are so high that there is no depreciable cost.

Required: 

Would you accept these as justifiable reasons for not depreciating buildings?