Question 1) (5 marks) During the financial year Large Mart had its license revoked by the Australian Environmental Protection Agency (EPA). This is due to excess environmental pollution in manufacturing collaborative hubs. On 29^th May 201x Large Mart engaged a technician from Canada to modify the plant and install a second stage thermal processor to reduce the level of pollution into the atmosphere.

The Chief Financial Officer (CFO) has asked the CEO whether the second stage thermal processor represents and asset of the company. The CFO is not sure if the second stage thermal processor is an asset because she reviewed the Australian Conceptual Framework and is concerned that the second stage thermal processor may not meet the economic benefit requirement that is part of the asset definition. The main reason for the CFOs concerns is that the second stage thermal processor is not actually used in manufacturing collaborative hubs.

a) Provide a detailed discussion of whether the second stage thermal processor that was installed by Large Mart meets the economic benefit requirement that is included in the asset definition criteria AND provide a detailed description of the future economic benefits (if any exist) that the second stage thermal processor may produce.

b) Determine whether the second stage thermal processor can be recognised as an asset in the books of Large Mart. When making this decision provide a detailed discussion that outlines how each of the asset definition criteria is (or is not) fulfilled.