One of the Arguments Against Recording Heritage Assets as Assets

question 22

Multiple Choice

One of the arguments against recording heritage assets as assets in the financial statements is that they typically generate negative net cash flows.SAC 4 argues in response to this that:

• A) Economic benefits as defined in SAC 4 extend beyond the mere financial benefits that an entity chooses to extract from its assets.
• B) These assets benefit the reporting entities, enabling them to meet their objectives of providing the needed services to beneficiaries.
• C) Meeting the needs of beneficiaries in a broad sense provides an economic benefit to society as a whole that should be captured through financial measurement in the annual reports of the entity.
• D) Heritage assets may in many cases not meet the definition of generating future economic benefits for the entity that controls them; however, in the cases where there is evidence of positive future cash flows these should be recorded as assets.

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Definitions:

Interstitial Fluid

The fluid that surrounds the cells in tissues, providing a medium for the exchange of substances between blood and cells.

Venous End

The part of a capillary bed where blood is collected from the capillary networks into the veins, characterized by lower pressure and oxygen content compared to the arterial end.

Lower Extremities

Lower extremities refer to the limbs and structures of the lower part of the body, including the hips, thighs, legs, ankles, and feet.

Precapillary Sphincter

A band of smooth muscle that adjusts blood flow into capillaries mainly by contracting and relaxing, thereby regulating the passage of blood into tissues.