From a traditional accounting perspective, assets are defined as to future economic benefits controlled by the entity as a result of past transactions or other events (Hoggett et al. 2003, p.35).

Assets normally include cash, accounts receivable, inventory, equipment, land, buildings, prepaid expenses, and so on. In particular, non-human living assets refer to farm animals and plants used for economic purposes. Non-human living assets are calculated on the basis of their market value.

Referring to the accounting concept of asset, study the imaginary case involving a farm and a forest.

The farm setting:

One person named A owns a farm. The following information relates to As farm.

• The farm land is valued at $120,000;

• There are 200 farm-grown sheep. The market value for one sheep is $500.

• The farm stores some wool cut from the sheep in the farm, valued at $10,000

  in the market.

• The farm stores 1000 sheep models. Each model can be sold at the price of

  $20 for visitors. These models were purchased from a carpenter; the purchase price was $5 per model.

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The forest setting:

The other person named B owns a forest, which is home to monkeys, birds and other wild animals. The following information relates to Bs forest.

• This forest was purchased by Bs grandpa 50 years ago, at a price of $1000 that time.

• 500 monkeys live in the forest. One private zoo manager tried to persuade B to allow the zoo to hunt 10 monkeys. If so the zoo would pay B $10,000. However, B never accepts this proposal, understanding that this activity is likely to be illegal.

• There are numerous birds in the forest. The number of these birds cannot be estimated.

• The forest contains a lot of trees. If all trees were cut, the timber could be valued at $800,000. But B never cuts any trees, wanting the forest to be a safe home for animals.

  Required:

  (1)Provide a list of assets of As farm. You need to indicate the book value of each asset. (8 marks)

  (2)Discuss whether or not the traditional accounting definition of asset can apply to interpret the information about Bs forest. (8 marks)

(3) If the traditional understanding of asset is limited, can you provide a new definition of asset to address accounting information relating to the forest? Compare and contrast your definition to the traditional definition of assets. (9 marks)