WUCB103 - Heritage Assets: Economic Value in Accounting Fundamentals

This essay explores the concept of heritage assets within the framework of accounting fundamentals, addressing the challenges of measuring their economic value. It examines the characteristics of heritage assets, such as their historical, artistic, or environmental significance, and evaluates whether they meet the standard accounting definition of an asset. The essay critiques commonly adopted valuation approaches, explaining why these methods are problematic when applied to heritage assets due to their unique and often irreplaceable nature. Furthermore, using examples like the Great Barrier Reef, Sydney Opera House, and Sydney Harbour Bridge, the essay discusses how attempts to quantify the economic value of these assets may impact perceptions of their inherent heritage value. The analysis is supported by references to relevant literature, including the work of Elwood and Greenwood (2016), providing a comprehensive overview of the complexities involved in accounting for heritage assets.

Running head: ACCOUNTING IN FUNDAMENTAL IN SOCIETY
Accounting in Fundamental in Society
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
In Response to Question 1..........................................................................................................2
In Response to Question 2..........................................................................................................2
In Response to Question 3..........................................................................................................3
Reference....................................................................................................................................5

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In Response to Question 1
Heritage Assets are those assets which are having some historical, artistic,
environmental, technological features held in the same so that the same has well maintained
in providing knowledge and culture. The UK Accounting Standard Board considers and
identifies the heritage assets as accounting assets (Laing et al. 2014).
The characteristics of the assets are that they usually have long lives, are created in a
unique way and have a have a unique concept in the same and are irreplaceable. Heritage
Assets are also donated and are inalienable which means that these assets have certain legal
and regulatory control and restriction which protects the transfer of ownership of such asset
or sale of assets. The valuation of the heritage assets of the company is considered to be
difficult and the same cannot be matched with the liabilities of the companies and cannot be
sold thus these are the key factors of a heritage assets (Ellwood and Greenwood 2016).
The heritage Assets meet the UK Accounting Standards where the assets are
recognized by the accounting standard board and the relevant policy regarding the same has
been identified. The heritage assets though particularly does not meet the accounting
standards as the heritage assets are not being matched up with the liabilities in a financial
statement and the same cannot be sold which makes difficult particularly identifying the
historical asset as an asset in the accounting standards.
In Response to Question 2
The commonly adopted valuation approaches for valuing the assets of the company
are the application of the historical cost approach, fair value method, replacement cost
approach and value in use approach are some of the common tools used. The valuation tools
can be applied by the company according to the characteristics and properties of the asset in

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accordance with the cash flows, purchase price and replacement cost of the assets (Cristofari
et al. 2015).
The application of historical cost approach cannot be applied in the case of historical
assets as the assets are primarily not purchased recently or the available price data at that time
may not be applicable in today’s case scenario as the asset has its own unique characteristics.
The application of the replacement cost can also be not applied in this case as the heritage
asset has its unique characteristics the cost of reconstructing the same would not sound
realistic and appealing. The application of the fair value could only be possible if the asset is
a tradable asset or if the asset has a defined cash flows but the heritage assets are not meant
for such activity. The income approach would also not justified for the valuation of the
historical asset as the heritage assets are not primarily meant for income generated in the
form of tourist fees but it also provides information’s and facts about the heritage culture and
information on the same (Aversano and Christiaens 2014). The quantification of such data is
not realistic and the same cannot be applied in the valuation of the assets of the company. It is
important that the asset provide an economic measurement which could not be realistically
determined in the case of historical assets of the company. The accounting treatment and
recognition if the heritage asset in the financial statement of the company also differs in
different regions. The expenses and revenue eared may be capitalised or shown in the income
statement of the company depending on the type of accounting policies and assumptions
followed for the same. Thus, the above factors identified make the quantification and the
valuation of the heritage assets of the company difficult (Beynon et al. 2018).
In Response to Question 3
The three pictures depicted of Great Barrier Reef, Sydney Opera House and Sydney
Harbour Bridge fit the characteristics of the Heritage Asset as the three assets are marked as a

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heritage assets of the Country. The characteristics of the heritage asset matches quite
similarly with the pictures depicted where the economic life and the measurement of the
assets of the company are not viable without the economic reality of the same (Biondi and
Lapsley 2014).
The heritage assets could only be regarded as the assets and be recognized in the
financial statement if the materiality and true economic value is reflected from the same. The
depicted pictures fit the characteristics of a heritage assets such as unique concept in the same
and are irreplaceable in nature. The heritage assets of the company are primarily considered
for providing knowledge know how and various other relevant data and information’s
relating to the same. The application of the fair value could only be possible if the asset is a
tradable asset or if the asset has a defined cash flows but the heritage assets are not meant for
such kind of activity.

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Reference
Aversano, N. and Christiaens, J., 2014. Governmental financial reporting of heritage assets
from a user needs perspective. Financial Accountability & Management, 30(2), pp.150-174.
Beynon, M.J., Jones, C., Munday, M. and Roche, N., 2018. Investigating value added from
heritage assets: An analysis of landmark historical sites in Wales. International Journal of
Tourism Research.
Biondi, L. and Lapsley, I., 2014. Accounting, transparency and governance: the heritage
assets problem. Qualitative Research in Accounting & Management, 11(2), pp.146-164.
Cristofari, C., Norvaišienė, R., Canaletti, J.L. and Notton, G., 2015. Innovative alternative
solar thermal solutions for housing in conservation-area sites listed as national heritage
assets. Energy and Buildings, 89, pp.123-131.
Ellwood, S. and Greenwood, M., 2016. Accounting for heritage assets: Does measuring
economic value ‘kill the cat’?. Critical Perspectives on Accounting, 38, pp.1-13.
Laing, J., Wheeler, F., Reeves, K. and Frost, W., 2014. Assessing the experiential value of
heritage assets: A case study of a Chinese heritage precinct, Bendigo, Australia. Tourism
Management, 40, pp.180-192.