Release of Elephants on Freelands
In term of economic phenomenon, the acquisition of the orphaned elephants constitutes a separate acquisition and not a business combination, because according to IFRS-3, “A business consists of inputs and processes applied to those inputs that have the ability to create outputs” and the orphaned elephants themselves do not constitute as “processes”. Therefore they cannot be defined as “businesses” and their acquisition cannot be defined as business combinations.

Users would find estimates of elephants’ total value and approximate age useful. The orphaned elephants should be classified as assets, because they are resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.

IAS-16 should be applied to the orphaned elephants because they are not engaged in any agricultural activities and therefore IAS-41 could not be applied to these elephants. The elephants are also not for sale and do not meet IAS-2’s criteria for inventories. Moreover, the elephants meet the criteria for “property, plant and equipment”. According to IAS-16, Property, plant and equipment are tangible items that:
(a) are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and
(b) are expected to be used during more than one period.

According to IAS-16, The cost of an item of property, plant and equipment shall be recognised as an asset if, and only if:
(a) it is probable that future economic benefits associated with the item will flow to the entity; and
(b) the cost of the item can be measured reliably.
Because the elephants can bring future economic benefits (tourism promotion) and the cost rescuing these elephants can be measured reliably. The asset recognition criteria are satisfied.

According to IAS-16,