Under U.S. GAAP, land owned by the firm is most likely to be reported on the balance sheet at: A. historical cost. B. fair marke value minus selling costs. C. historical cost less accumulated depreciation. Answer: A =============== Is the above true in the cases where the firm continues to own the land for more than one accounting period? For example, does the firm continue to report the historical cost even after 10 yrs of land ownership (i.e. land appreciation is ignored) ? Thanks.
I think so, yes. At least I cannot remember reading anything about upward revision in value. US GAAP is always conservative on this account anyways, they tend not to allow an upward revision of value for other things either. If the firm were to sell the land at some point, the company would then record a gain from the sale of land (assuming that the value of the land increases over time) in the income statement.
IN US GAAP, any upward revaluation of assets is not allowed (except for some assets like held for trading)
varundarji Wrote: ------------------------------------------------------- > IN US GAAP, any upward revaluation of assets is > not allowed (except for some assets like held for > trading) +1 When a assert is held for sale then assert is valued at fair value.
historical cost for fixed assets and inventory my friend in this country
Keep in mind that book or accounting value (i.e. what’s on the financial statements and tax returns) can be very different from market value. Under GAAP, land is indeed reflected at cost, and buildings are depreciated. The result is that after many years there can be huge differences in the book value and the market value of the real estate.
Thanks guys. Land seems to be an odd one out of the other fixed assets given its appreciation - and was not quite sure on its treatment. But the explanations are quite clear. In reference to other assets which are allowed upward revaluation, Available for Sale securities are valued at Fair Value similar to Trading Securities, as mentioned above.
I learnt, outside of level 1 scope, that a company can choose to revalue its land. If it chooses to do so, it need to revalue it annually.
Sujan Wrote: ------------------------------------------------------- > Thanks guys. > > Land seems to be an odd one out of the other fixed > assets given its appreciation - and was not quite > sure on its treatment. But the explanations are > quite clear. > > In reference to other assets which are allowed > upward revaluation, Available for Sale securities > are valued at Fair Value similar to Trading > Securities, as mentioned above. once an impairment occurs, you cant revise the securities upward per GAAP, I think you can revise upward for IFRS, not sure though.