Auditor John Luck was auditing the accounting statements of Peter&Peter company. He had following observations.

Peter&Peter company had an office building, which they purchased in year 2000. Recognizing that the values of land have been increasing in the recent years. Peter&Peter Co increased the balance sheet amount of land from $50,000 to & 70,000. Explain the accounting concept or convention which is applicable in this context and also comment whether this treatment is a violation or not.

Response: -