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:

1. Describe the current accounting treatment fo 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.
2. 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 FASB's position.In your anser, refer to the conceptual framework.
3. Criticize theh FASB's position.In your answer, refer to the conceptual framework

Property, plant, and equipment (plant assets) generally represent a material portion of the total assets of most companies.Accounting for the acquisition and usage of such assets is therefore an important part of the financial reporting process.

Required:

1. Distinguish between revenue and capital expenditures, and explain why this distinction is important.
2. Briefly define depreciation as used in accounting.
3. Identify the factors that are relevant in determining the annual depreciation, ande explain whether these factors are determined objectively or whether they are based on judgement.
4. Explain why depreciation is shown as an adjustment to cash in the operations section of the statement of cash flows.