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.
• E) None of the given answers.

---

Definitions:

Horizontal Analysis

A financial analysis technique that compares line items in financial statements over a series of periods to identify trends and growth patterns.

Segment Data

This refers to the financial information that is reported separately for different divisions or segments of a company, providing insight into the performance of each segment.

Recent Years

A term referring to the latest or last few years, without a precise timeframe but generally considered to encompass the immediate past.

Cash Receipts Journal

An accounting ledger that tracks cash transactions coming into the business, documenting all cash sales and receivables.