The Chief Operations Officer (COO) of Large Mart has been unable to find answers for two accounting problems. She has asked you to investigate the following questions and to write a report (including relevant references to source materials and accounting standards) that will tell her what the answers to these questions are, and that will provide her with a sufficient understanding of these issues to allow a well-supported decision to be made. To achieve this, the COO asks you to answer specific questions, but also to outline the development of your answers sufficiently to allow a reader to understand how you have developed your answers.

Question 1) Large Mart has recently purchased and installed industrial noise control equipment that meet Occupational Safety and Health (OSAH) and the National Institute for Occupational Safety and Health (NIOSH) regulation. This is necessary as industrial noise emanating from its construction activities and manufacturing/production operations in Armidale, is impacting the health and wellbeing of its workforce and the excessive noise is affecting the surrounding residential area.

The COO has asked the Health and Safety Director (HASD) whether or not the industrial noise control equipment represents and asset of the company. The HASD is not sure if the noise control equipment is an asset because she reviewed the Australian Conceptual Framework and is concerned that the industrial noise control equipment may not meet the economic benefit requirement that is part of the definition of an asset. The main reason for the HASD concerns is that the industrial noise control equipment is not actually used in the production process.

a) Provide a detailed discussion of whether or not the industrial noise control equipment that was acquired and 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 industrial noise control equipment may produce.

b) Determine whether or not the industrial noise control equipment can be recognized 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.