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?