You are a graduate accountant working for Stone & Co Accounting Specialists Pty Ltd. One of their new clients is Ms Sahra Ong, who owns and operates ‘Vacation’. ‘Vacation’ specialises in bespoke fashionable beachwear that has a high SPF rating.

Ms Ong has had a meeting with the Managing Partner of Stone & Co today, and you were invited to attend the meeting.

After the meeting, the Managing Partner tells you she is extremely busy with a number of clients at the moment and asks you to prepare a letter to Ms Ong which covers the points listed below.

REQUIRED:

Please write a letter addressed to Ms Ong explaining the following:

Ms Ong has recently interviewed and hired Mr Zha a well known designer to assist her with the next range of beachwear. Mr Zha signed an employment contract to the effect that he would not disclose any of the ‘Vacation’ beachwear designs/patterns to anyone outside of ‘Vacation’. Ms Ong is delighted that Mr Zha has accepted the position of designer for ‘Vacation’ as not only will he be of great assistance but when it becomes known that he is a designer at ‘Vacation’ she is sure it will boost sales.

Ms Ong would like to list Mr Zha as an asset in the Balance Sheet. Using the appropriate element* definition, apply the facts provided and explain to Ms Ong whether or not she can list Mr Zha as an asset in the financial statements.