Cover feature - Early adoption - how to lose millions from the balance sheet

The Accounting Standards Board will be pushing for early adoption of its heritage assets reporting standard, even though it is not likely to become applicable until 2009. So if an organisation decides it is not practicable to place a value on its heritage assets - and it would appear that many believe this to be the case - then there will be an opportunity to remove recently acquired assets from the balance sheet.


FRS 15, heritage assets are required to be put on the balance sheet at cost if they have been acquired since April 2001. While some, notably the National Trust, do not do so, others have been forced to place very significant figures in their balance sheets. For instance, the British Museum carries around £30m in its balance sheet for heritage assets, and the National Gallery has a figure of £55m.

If both these organisations chose not to capitalise their heritage assets and at the same time opt for early adoption, it is possible their balance sheets will lose a combined £85m at a stroke.Of course, if they went for the full valuation approach, the balance sheet could conceivably be boosted by many millions of pounds, which many argue would not be a true reflection of the accounts.

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