Under FRS 102 a heritage asset is a tangible or intangible asset with historic, artistic, scientific, technological, geophysical or environmental qualities that is held and maintained principally for its contribution to knowledge and culture. It is recognised at cost or valuation using the normal property, intangible asset or lease rules, donated items are usually brought in at fair value, and only in exceptional cases can an asset be left off the balance sheet. Whether recognised or not, heritage assets carry their own set of disclosures in paragraphs 34.55 and 34.56.

What makes an asset a heritage asset?

The FRS 102 glossary definition has two parts. The asset must have one of the listed qualities (historic, artistic, scientific, technological, geophysical or environmental), and it must be held and maintained principally for its contribution to knowledge and culture. The second part does most of the work.

Paragraph 34.50 asks management to use judgement and gives two examples of assets that fail the purpose test:

  • works of art held by commercial entities, which are not maintained principally for their contribution to knowledge and culture; and
  • investment property, which is held to earn rentals or for capital appreciation or both.

Paragraph 34.50A deals with operational heritage assets. An asset with heritage characteristics that the entity uses itself, such as a historic building used for teaching by an education establishment, is accounted for under the normal section of FRS 102 (usually Section 17, see property, plant and equipment under FRS 102) rather than the heritage asset rules. The entity is still encouraged to give the heritage disclosures for it.

Typical heritage assets therefore include museum and gallery collections, archives, scientific specimen collections and historic monuments held by a trust for public access and preservation.

Who has to apply the heritage asset rules?

The heritage asset paragraphs (34.49 to 34.56) are not prefixed PBE, so they apply to any entity reporting under FRS 102 that holds heritage assets. In practice most holders are charities, other public benefit entities and bodies such as independent museums and historic house trusts.

Charities in the UK have a further layer. Section 395(2) of the Companies Act 2006 requires a charitable company to prepare Companies Act individual accounts, so it cannot use international standards. Charities preparing accruals accounts follow the Charities SORP, and the Charity Commission confirms that SORP 2026 applies to reporting periods starting on or after 1 January 2026. Under paragraph 6 of FRS 100, an entity within a SORP must state in its accounts the title of the SORP and whether its accounts comply with its provisions currently in effect, and explain any departures.

How are heritage assets recognised and measured?

Paragraph 34.51 sends recognition and measurement to Section 17 (property, plant and equipment), Section 18 (intangible assets) or Section 20 (leases), as appropriate. That means:

  • purchased heritage assets are recognised at cost;
  • the entity can choose the cost model or the revaluation model, and under paragraph 17.15 a revaluation policy has to be applied to the whole class of asset (see revaluation of fixed assets); and
  • heritage assets held under a lease are right of use assets, which paragraph 34.55 requires to be shown separately in the disclosures.

Donations are the distinctive issue. Paragraph 34.53 says a heritage asset acquired in a non exchange transaction is usually measured at fair value on initial recognition, with paragraph PBE34.73B giving guidance on fair value for donated assets. Only in exceptional cases, where fair value cannot be measured reliably at a cost commensurate with the benefit to users, is the asset not recognised in the balance sheet. It must then be disclosed instead.

Paragraph 34.54 applies Section 27 to impairment. The standard gives physical deterioration or breakage, and doubts about authenticity, as examples of when a heritage asset may be impaired (see impairment of assets under FRS 102).

What has to be presented and disclosed?

Paragraph 34.54A requires heritage assets to be presented separately from other assets in the balance sheet. Paragraph 34.55 then requires, for all heritage assets held:

  1. an indication of the nature and scale of the heritage assets held;
  2. the policy for acquisition, preservation, management and disposal, including a description of the records kept and the extent to which access is permitted;
  3. the accounting policies, including the measurement bases used;
  4. for unrecognised heritage assets, why they are not recognised, their significance and nature, and information helpful in assessing their value;
  5. for recognised heritage assets, the carrying amount at the start and end of the period analysed between cost and valuation, and for valued assets the date and method of valuation, whether an external valuer was used and their qualification, and any significant limitations; and
  6. a summary of transactions for the current period and each of the previous four periods: acquisitions at cost, the value of donated acquisitions, disposals with proceeds, impairment, and depreciation or amortisation, split between recognised and unrecognised assets.

Paragraph 34.55A adds that where a heritage asset donated in the period has not been recognised because fair value cannot be measured reliably, the entity must say why. Disclosures can be aggregated by group or class if that does not obscure significant information.

The five year summary is relieved by paragraph 34.56: where it is impracticable, the summary need not cover more than one prior period, and the entity must state that it is impracticable.

What does this look like in practice?

Illustration only. A charitable trust runs a small local museum. During the year:

Event Accounting treatment
Buys a collection of maps for £12,000 Recognise a heritage asset at cost of £12,000
Receives a donated painting with a reliable fair value of £30,000 Recognise a heritage asset of £30,000 and donation income of £30,000 under paragraphs 34.53 and PBE34.73
Receives a donated archive of family letters for which no reliable value can be obtained at proportionate cost Do not recognise; disclose why, describe the archive and give information helpful in assessing its value (paragraphs 34.55(d) and 34.55A)
A display case is damaged and a ceramic piece carried at £4,000 is broken beyond repair Consider impairment under Section 27

The trust’s office, a listed building it occupies and uses for administration, is not a heritage asset under paragraph 34.50A. It stays in property, plant and equipment, although the trust may choose to give heritage style disclosures about it.

What mistakes come up most often?

  • Calling corporate art a heritage asset. A company’s art collection usually fails the principal purpose test in paragraph 34.50(a).
  • Defaulting to non recognition. Paragraph 34.53 makes non recognition of donated items exceptional. A difficult valuation is not the same as one that cannot be made reliably at proportionate cost.
  • Forgetting the five year summary. The transaction summary in paragraph 34.55(f) covers the current and four previous periods unless impracticable, and that relief must be stated.
  • Missing the separate balance sheet line. Paragraph 34.54A requires separate presentation.
  • Ignoring leased items. Heritage assets held as a lessee must be shown separately in the disclosures.

For the related rules on donations and other non exchange income, see public benefit entities and concessionary loans.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.