The ship of Theseus

Ever since Marvel’s miniseries, WandaVision premiered on the streaming platform, fans were waiting for its one big rumoured surprise in the finale episode, a much awaited cameo by another comic book character. While that did not happen, who had thought that a sci-fi superhero series would end up with its fans looking into an ancient philosophical paradox, the ship of Theseus. The ship wherein Theseus and the youth of Athens returned from Crete. It had thirty oars, and was preserved by the Athenians for about five centuries, for they took away the old planks as they decayed, putting in new and stronger timber in their places, this inspired a thought experiment that supposed, over the period of time every part of the original ship was replaced, would it still be the ship of Theseus? The thought experiment further added that if it is so, then suppose the removed parts of the original ship are reassembled into a ship. Which of the two ships would be the ship of Theseus?

While in the episode, the discussion is very short lived with the White Vision impulsively concluding that "Neither is the true ship, both are the true ship". Perhaps the Sokovia accords permits the avengers to conclude abstrusely, but as accounting professional are we allowed to do that?! Let us understand what the Indian Accounting Standards or the IFRS have to say on the issue.

Accounting and Reporting Standards

The Ship of Theseus would meet both the recognition criteria stipulated under para 7 of Ind AS 16 - Property, Plant and Equipment, and would have to be recognised as an asset in the books of accounts. Paragraph 13 of Ind AS 16 provides that, parts of some items of property, plant and equipment may require replacement at regular intervals. For example, a furnace may require relining after a specified number of hours of use, or aircraft interiors such as seats and galleys may require replacement several times during the life of the airframe. Items of property, plant and equipment may also be acquired to make a less frequently recurring replacement, such as replacing the interior walls of a building, or to make a non-recurring replacement. Under the recognition principle in paragraph 7, an entity recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred, if the recognition criteria are met. Further, the carrying amount of those parts that are replaced is de-recognised in accordance with the de-recognition provisions of Ind AS 16. A similar guidance is provided in IAS-16.

Therefore while the parts of the ship are replaced to the extent that no original part remains on the ship, the ship as an asset continues to retain its name since its inception. It is simply that every time a part is attached to the ship, it becomes the ship itself. It is like pouring a cup of water in the ocean, it is no more the water of the cup, it is the ocean now, and if later the ocean dries up, leaving only the cup of water behind, it would still be the water of the ocean and not the cup. While this concept differs from the monkey-ladder experiment in spirit, it finds congruence in the working model. 

The Monkey Ladder Experiment

It is worthy to note that as each monkey was replaced it acquired the character of the group, and at the end, even when no original monkey was present in the cage, the group's actions were that of the original batch of monkeys. Had the batch been replaced all at once, the cage would have had a batch of monkeys completely different from its predecessors, however, since they were replaced one at a time, the replaced monkeys simply became the part of the original group of monkeys. 

Caution

The above stated course would apply only when the replaced part does not alter the core nature of the asset. Let suppose the parts of the ship are so replaced that it turns into a submarine, in such a case the asset losses its core nature and will have to be de-recognised while the new asset will have to be recognised in the books. It acts in a similar way as the doctrine of basic structure is tested on the amendments made to our constitution. Shanti Bhushan in a petition against the amendments made to the constitution during the period of Emergency in India gave a very interesting example in the supreme court. He argued that, let suppose a person has all of his organs transplanted except his left thumb. Would the court consider him the same person, merely because of the fact that his thumb impression at present matches with his thumb impression earlier. 

Conclusion

On an intellectual level, The ship of Theseus remains a paradox that will torment philosophers for times to come, however as professionals we are guided by the Accounting and Reporting Standards, which leave no room for ambiguity in dealing with such issues. 

Author,

Manish Solanky