Accounting for art, gold and collectables held by a company

FRS 102 has no section written for art, bullion, fine wine or similar items held by an ordinary company, so the treatment follows the reason the company holds them. Items held for sale in the ordinary course of business are inventories under Section 13, items used in the business are property, plant and equipment under Section 17, and items held purely for capital growth need a policy developed under paragraphs 10.4 to 10.6, which in practice usually means cost or the Section 17 revaluation model, because company law does not allow these assets to be carried at fair value through profit or loss.

Why does no section of FRS 102 fit neatly?

Each obvious candidate has a definition that excludes most collectables held as investments:

• Investment property. The glossary limits this to property, meaning a building or part of a building or the site it stands on, held to earn rentals or for capital appreciation. Paintings and bullion are not property in that sense.
• Financial instruments. The glossary defines a financial instrument as a contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another. A gold bar or a case of wine held in a vault is a physical item, not a contract, so Sections 11 and 12 do not apply to it. A holding in a gold fund or an exchange traded product is different and is a financial instrument.
• Heritage assets. These are held and maintained principally for their contribution to knowledge and culture. Paragraph 34.50(a) says that works of art held by commercial entities are sometimes not heritage assets for exactly that reason.
• Property, plant and equipment. The glossary requires tangible assets held for use in the production or supply of goods or services, for rental to others or for administrative purposes, and expected to be used during more than one period.
• Inventories. The glossary covers assets held for sale in the ordinary course of business, in production for such sale, or as materials or supplies.

So the starting point is a factual question: why does this company hold this item?

How does the company develop a policy when nothing applies?

Paragraph 10.4 says that where an FRS does not specifically address a transaction, management uses judgement to develop a policy that gives relevant and reliable information, reflecting economic substance and being prudent and neutral. Paragraph 10.5 then directs management, in descending order, to the requirements of an FRS dealing with similar and related issues, any applicable SORP, and the concepts and pervasive principles in Section 2. Paragraph 10.6 allows management also to consider adopted IFRS on similar issues. Paragraph 10.7 requires the chosen policy to be applied consistently to similar items.

For a physical item held long term with no production use, Section 17 is usually the nearest similar section, because it deals with tangible items held over more than one period and offers both a cost model and a revaluation model.

Is the item a fixed asset or a current asset?

Company law classifies by intention. Schedule 10 to SI 2008/410 defines fixed assets as assets intended for use on a continuing basis in the company’s activities, and current assets as assets not intended for such use. A bullion holding kept as a long term reserve, or a collection of paintings displayed in the office, will usually be a fixed asset. Wine bought by a merchant to sell next year, or bullion held by a dealer, is a current asset. Our page on whether an investment is a fixed or current asset explains how intention is evidenced.

Can the company show the items at market value?

This is where company law constrains the policy. Paragraph 39 of Schedule 1 to SI 2008/410 allows stocks, investment property and living animals and plants to be included at fair value, with changes in value taken to profit or loss under paragraph 40. Paragraph 36 does the same for financial instruments. Physical collectables held as fixed asset investments fall into none of these categories, so fair value through profit or loss is not available for them in Companies Act accounts.

What company law does allow is the alternative accounting rules. Paragraph 32(2) permits tangible fixed assets to be included at a market value determined at the date of their last valuation, and paragraph 35 requires the resulting surplus or deficit to be taken to a revaluation reserve. That matches the FRS 102 revaluation model in paragraphs 17.15B to 17.15F: the asset is carried at fair value at the date of revaluation, increases go to other comprehensive income and equity, and decreases below previous surpluses go to profit or loss. Paragraph 17.15 says that if the revaluation model is chosen it must be applied to all items in the same class, and paragraph 17.15B requires revaluations regular enough that the carrying amount does not differ materially from fair value at the reporting date. The trade off between the two approaches is discussed in historical cost versus fair value.

Dealers are different. Paragraph 13.3 allows inventories to be measured at fair value less costs to sell only where that is a more relevant measure because the entity operates in an active market where sale can be achieved at published prices and the inventory is a store of readily realisable value. A bullion dealer may meet that test; an art dealer selling unique works usually will not, and measures stock at the lower of cost and estimated selling price less costs to complete and sell under paragraph 13.4.

Do these items need depreciating?

Paragraph 18 of Schedule 1 requires depreciation of a fixed asset that has a limited useful economic life, writing off cost less estimated residual value over that life. Gold does not wear out, and a well kept painting will often have a residual value at least equal to its cost, in which case the depreciable amount is nil. Fine wine is less clear because it has a drinking window and can deteriorate, so the residual value estimate needs real thought. Whatever the conclusion, paragraph 19(2) of Schedule 1 still requires a provision where a fixed asset has diminished in value and the reduction is expected to be permanent, and FRS 102 Section 27 applies to impairment. Damage, doubts about authenticity or a fall in the market for an artist are typical triggers; impairment under FRS 102 sets out the process.

What goes into the cost?

Paragraph 27(1) of Schedule 1 says the purchase price of an asset is the actual price paid plus any expenses incidental to its acquisition. For a fixed asset under Section 17, paragraph 17.10(a) includes legal and brokerage fees, import duties and non refundable purchase taxes, after trade discounts. Auction buyer’s premium, dealer commission and import duty paid to bring an item into the country are therefore part of cost, while VAT that the company can recover is not.

Ongoing costs of holding the item, such as vault fees, insurance and conservation that maintains rather than improves it, are expenses of the period. For wine held as stock, paragraph 13.13(b) excludes storage costs from inventory cost unless storage is necessary in the production process before a further production stage.

How might this look in practice?

Illustration only.

Item	Why held	Likely treatment
Paintings in the reception area	Used for administrative purposes over many years	Property, plant and equipment; cost or revaluation model; depreciation often nil
Gold bars held in a vault as a reserve	Long term store of value, no plan to sell soon	Fixed asset; policy by analogy with Section 17; cost or market value with a revaluation reserve
Wine bought by a wine merchant	Held for sale in the ordinary course of business	Inventory under Section 13 at lower of cost and estimated selling price less costs
Units in a gold exchange traded product	Investment	Financial instrument under Section 11 or 12, not a physical asset

What disclosures should the accounts include?

The accounting policy note should explain how the items are classified and measured, especially where the policy was developed under paragraph 10.4. Where they are presented as property, plant and equipment, paragraph 17.31 requires for each class the measurement basis, depreciation methods, useful lives or rates, and a reconciliation of the carrying amount. Inventories need the paragraph 13.22 disclosures, including the cost formula. The capital gains position on disposal is a separate question from the accounts; for coins see gold coins and capital gains.

What mistakes come up most often?

• Carrying bullion or art at market value with gains in profit or loss, which company law does not permit for these assets outside stock.
• Calling a painting a heritage asset simply because it is valuable.
• Depreciating gold over an arbitrary life, or failing to consider whether wine has a limited life.
• Leaving out buyer’s premium and import duty from cost, or capitalising vault and insurance fees.
• Revaluing one painting but not the rest of the class.

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Related Accountapedia entries

• VAT on investment gold
• VAT on works of art and antiques
• Accounting for listed shares held by a company
• How is crypto held by a company taxed
• Investment bonds held by trustees

Sources

• Financial Reporting Council: FRS 102 September 2024 tmKYWO6
• legislation.gov.uk: SI 2008/410, schedule 10
• legislation.gov.uk: SI 2008/410, schedule 1

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.