Context: accounting, asset, Australia, GAAP

Self-generating and regenerating assets (SGARAs) is just a fancy accounting term for "non-human-related living assets". That is, these are things that an accounting entity may own that are used to derive future economic benefits, but are living things. These would include trees in a plantation, or cows in a field. The distinguishing feature of SGARAs is their "natural ability to grow and/or procreate" (Roberts et. al. 1995, 11).

It is this particular property that makes it difficult for accountants to place an economic value on these things. In particular:

  • The costs incurred in maintaining these assets bear little resemblance to future economic benefits that are embodied in them, because the inputs that contribute most to the SGARAs' biological change (sunlight, air, water) have little or no financial cost.
  • The change in future economic benefits that are embodied in SGARAs can be attributed to factors other than biological growth, e.g. price changes.
  • The non-SGARA produce of SGARAs (e.g. cow manure from cows) needs to be valued.
  • The long-term nature of SGARAs as they grow to reach a marketable state

There are several ways, then, of placing a value on these SGARAs:

  • Historical cost: how much the entity paid to have the assets.
  • Recoverable value: the amount that can be recovered through its use and disposal.
  • Market value: the current price of the asset.

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