Subject: Non-Current Assets (asset definition / Asset
valuation)

Details: A group of metropolitan councils had for some years
operated a very large rubbish tip. Unfortunately the tip was rapidly filling
and the search was on for a new one.

The councils favoured acquiring a yawning void of nearly 3
million cubic metres, which was formerly a quarry. They offered $1 a cubic
metre to lease the quarry site.

A newspaper columnist noted that this sounded like something
for nothing. However, to some experts in private enterprise it sounded more
like nothing for something. These enterprising operators secured the lease of
the quarry by tendering $2.50 a cubic metre.

(a) Explain how an asset can consist of ‘nothing’.

(b) What do the competing tenders indicate about the concept
of asset valuation?