The City of Martinsville donated land to Essex Company The fair value of the land was $100,000 The land had cost the city $45,000 Required Describe the current accounting treatment for the land Include in your answer the amount at which the land would be valued by Essex Company and any other income statement or balance sheet effect The current accounting treatment for the land at which the land would be valued by the Essex Company and other income statement or balance sheet effect would fall under financial reporting standard 114 accounting for donations Under the recommendations outlined in SFAS No 116 (see FASB ASC 720), the FASB required that donated assets be recorded at fair value and that revenue be recognized equivalent to the amount recorded for a donation Defend the FASBs position In your answer, refer to the conceptual framework Criticize the FASBs position In your answer, refer to the conceptual framework Assume that immediately before the donation, Essex had assets totaling $800,000 and liabilities totaling $350,000 Compare the financial statement effects of the FASB requirement with previous practice For example, how would EPS or ratios such as debt to equity be affected

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The City of Martinsville donated land to Essex Company. The fair value of the land was $100,000. The land had cost the city $45,000. Required:

The City of Martinsville donated land to Essex Company. The fair value of the land was $100,000. The land had cost the city $45,000.

Required:

Describe the current accounting treatment for the land. Include in your answer the amount at which the land would be valued by Essex Company and any other income statement or balance sheet effect.

The current accounting treatment for the land at which the land would be valued by the Essex Company and other income statement or balance sheet effect would fall under financial reporting standard 114- accounting for donations.

Under the recommendations outlined in SFAS No. 116 (see FASB ASC 720), the FASB required that donated assets be recorded at fair value and that revenue be recognized equivalent to the amount recorded for a donation.
1. Defend the FASBs position. In your answer, refer to the conceptual framework.
2. Criticize the FASBs position. In your answer, refer to the conceptual framework.
Assume that immediately before the donation, Essex had assets totaling $800,000 and liabilities totaling $350,000. Compare the financial statement effects of the FASB requirement with previous practice. For example, how would EPS or ratios such as debt to equity be affected?