Refer to BE2-4. Discuss whether the items identified would be considered assets if the definition proposed by IFRS were applied.
Discuss whether the following items would meet the definition of an asset using the IFRS definitions currently in place. If so, explain with reference to the appropriate criteria.
(a) Maxwell Ltd. owns a corporate fleet of cars for senior management's use in performing work duties.
(b) A franchisee has a licence to operate a Tim Hortons restaurant.
(c) Customized manufacturing machinery can only be used for one product line and has a small and limited customer market.
(d) The parent company has guaranteed the operating line of credit of its subsidiary, which resulted in the subsidiary obtaining a lower interest rate than it would otherwise receive. Is the guarantee an asset for the subsidiary?
(e) Fresh Water Inc. bottles and sells the spring water from a natural spring near its property. Is the natural spring an asset of the company?
(f) Mountain Ski Resort Ltd. often has to use its snow-making machine to make snow for its hills and trails when there is not enough natural snowfall. Is the snow an asset for Mountain Ski?