W9
Discuss: Application questions 2.27 pp66
2.27
A public museum has an exhibition of 20 rare fossils. A number of these were
purchased at a total cost of $750 000, while six items were donated to the museum.
If sold (to other museums and collectors) it is estimated that the fossils would sell
for around $1.5 million, although the donated items (which would sell for $600
000) were donated on the condition that they would not be sold and are to be
returned to the donors if no longer required by the museum. The museum charges
a nominal fee of $2 for entry to the exhibit and receives on average $30 000 per
annum in fees. It is estimated that it costs around $70 000 per annum to maintain
the exhibition.
Applying the definition and recognition criteria for assets, explain whether the
fossils could be recognised as assets of the museum.
(LO3 and LO4)
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