Accounting for museum exhibits in private profit-oriented entities under IFRS

Purpose The objective of this paper is to propose an accounting methodology for accounting and reporting museum exhibits by private profit-oriented entities following IFRS that (1) reflects the economic substance of transactions, (2) maximises the information value for users and (3) reduces the variability of reporting methods across various entities. Design/methodology/approach A combination of research methods has been employed: (1) a theoretical analysis of the IFRS Conceptual framework, measurement requirements and relevant IFRS standards, focusing on their application to museum exhibits in private profit-oriented entities and (2) empirical comparative studies of current reporting practices in selected museums and countries. Findings The paper suggests a possible methodology for accounting and reporting museum exhibits in private profit-oriented entities that follow IFRS. Museum exhibits are divided into two groups: (1) unique and rare objects and (2) exhibits for which an active market exists. Separate accounting methods are suggested for each of these groups. Research limitations/implications The paper exclusively addresses the issue of reporting museum exhibits and similar objects in private profit-oriented entities. It does not address other reasons why entities may hold heritage assets, such as investing in art or conducting business operations in premises with heritage status. Practical implications The proposed solution can serve as guidance for the measurement and reporting of museum exhibits in existing private profit-oriented entities that follow IFRS. The paper can also help accounting students and accounting practitioners understand the mechanisms required by IFRS in situations where IFRS do not provide solutions for certain transactions. Originality/value Most of the existing academic literature focuses solely on public or private not-for-profit entities, leaving private profit-oriented entities without adequate analysis.