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This principle encourages conservatism.A factory built for $100,000 and updated with $50,000 in capital improvements on land purchased for $150,000 will show on the balance
This principle encourages conservatism.A factory built for $100,000 and updated with $50,000 in capital improvements on land purchased for $150,000 will show on the balance sheet as a $300,000 asset (less accumulated depreciation).However, the land, building, and improvements could have a market value today of $500,000 (maybe or more ...... or maybe less).
Is this a good (or bad) way for U.S. firms to account for capital assets?Why or Why not?
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