Recent Question/Assignment

Holmes Institute HI5025 Memo 03 – Semester 02, 2015
On 29 May 2012, the (Australian) Water Accounting Standards Board (WASB) passed the
Australian Water Accounting Standard 1 (AWAS1 – can be downloaded and reviewed at: ).
Crystal Creek Falls (see Figure 1) is located between the Queensland (Australia) cities of
Ingham and Townsville. Each week, a million hectare-metres of clean cool, clean, crystal clear
water flow through it and on into the Pacific Ocean, 10 kilometres later. One of the farmers in
the lower reaches of the river (Mr Douglas McKay) has converted his crops from waterintensive
peaches to low-water use Acai Palms (see Figure 2).
The above farmer has formed a corporation to juice and sell the Acai Palm Fruit – Majestic
Acai Juice Australia Inc. (MAJAI). A key asset of MAJAI is the rights to 100,000 hectaremetres
of water per week that the farmer transferred from his farm to MAJAI. NB: due to the
change in use of the water (i.e. from irrigation to food processing) the water (which was
previously taken from below the falls) will have to be taken from well above the falls. The falls
is currently only minor tourist attraction but its value as a draw for tourists has been growing.
1) Please download and review the document at ,
2) Comment on whether or not the transfer of the water rights from the farm to the processing
firm is going to be acceptable (explain).
3) Discuss the accounting issues that may be raised by the transfer of the water rights.
Figure 1: Crystal Creek Falls, Queensland Figure 2: Acai Palm Fruit