A: That's right.
Q: If I actually see that someone paid money, then okay, then there must be something here.
A: That's right. (Transcript of the hearing, p. 998, paras. 13-19).
In fact, without contractual anchoring, and given the existence of an actual competitor, payments to growers beyond what is required are essentially closer to business expectation or general commercial goodwill than to an item that can be identified as a separate asset.
The Test of Control and Certainty
- As to the element of control over the resource, the evidence and testimonies indicate that the element of "control" does not exist in our case either. Although the company transferred the funds to the growers, it is possible that this was an event in the past from which it hoped to derive a future advantage, but in practice it had no real control over the created resource, i.e., the trust of the towers, which turned out to be a broken reed at the time of the company's collapse in 2011. However, I am of the opinion that the collapse did not create a failure in retrospect, but merely revealed that already in real time this trust was devoid of contractual or binding anchoring, and therefore too fragile to meet the definition of an asset.
- In the absence of a legal obligation, each grower was free to contract with a competitor or route its products to other customers. Agrexco had no ability to guarantee that the expected economic benefits would indeed flow to it as a result of the 'advances', and it could not prevent other parties, in the form of potential competitors in the agricultural export industry, from contracting with those growers. Thus, Standard 30 emphasizes that an entity's ability to control an intangible asset is examined, inter alia, by the existence of contractual or legal rights that confer an exclusive advantage. In the absence of such rights, it is difficult to prove that the resource is under the company's control when Agrexco's competition is growing stronger in those years. My conclusion is that in the circumstances of the case, Agrexco did not have effective control over the resource for which the property was registered, i.e., over the growers' very loyalty to it. I will explain these assertions.
- There is no dispute between the parties that the various standards, whether IAS 38, Standard 30 or the conceptual framework, require an element of control in order for an asset definition to take place. The existence of economic value or identifiable ability is not sufficient, and proof of "control" is required that does not exist without an actual purchase transaction. This is from the testimony of CPA Morad (Protocol, p. 1093, questions 11-15):
"To get to know the property. So is it true that one of the tests that is needed to recognize the asset other than the element of the recoverable amount is the element of control. If you know, if you don't know then you don't know.
- Of course it is. It's part of the restorative bar. What is returnable? Restitution is if I have no control, it is not retrievable. "
This is also evident from the testimony of CPA Gottlieb (Transcript, p. 991, questions 4-7):