Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Write a 700- to 1,050-word response to the questions located at the end of the following case: Case 3-5 International versus U.S. Standards Case 3-5

Writea 700- to 1,050-word response to the questions located at the end of the following case:

  • Case 3-5 International versus U.S. Standards

Case 3-5 International versus U.S. Standards

Under U.S. GAAP, property, plant, and equipment are reported at historical cost net of accumulated depreciation. These assets are written down to fair value when it is determined that they have been impaired.

A number of other countries, including Australia, Brazil, England, Mexico, and Singapore, permit the revaluation of property, plant, and equipment to their current cost as of the balance sheet date. The primary argument favoring revaluation is that the historical cost of assets purchased ten, twenty, or more years ago is not meaningful.

A primary argument against revaluation is the lack of objectivity in arriving at current cost estimates, particularly for old assets that either will not or cannot be replaced with similar assets or for which no comparable or similar assets are currently available for purchase.

Required:

a.

Discuss the qualitative concept of comparability. In your opinion, would the financial statements of companies operating in one of the foreign countries listed above be comparable to a U.S. companys financial statements? Explain.

b.

Discuss the concept of reliability. In your opinion, would the amounts reported by U.S. companies for property, plant, and equipment be more or less reliable than the current cost amounts reported by companies in England, Mexico, or elsewhere?

c.

Discuss the concept of relevance. In your opinion, would the amounts reported by U.S. companies for property, plant, and equipment be more or less relevant than the current cost amounts reported by companies in England, Mexico, or elsewhere?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Payroll Accounting

Authors: Bernard J Bieg, Judith A Toland

24th Edition

1285437063, 9781285437064

More Books

Students also viewed these Accounting questions

Question

Am I just skimming over the problem?

Answered: 1 week ago

Question

Explain the pages in white the expert taxes

Answered: 1 week ago