Revaluation Assets

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There are still many differences in accounting treatment between International financial reporting standards (IFRS) and the U.S Generally Accepted Accounting Principles (GAAP). While IFRS are widely used by many countries around the world, FASB of the U.S still working on the intention of either adopt the IFRS or converge towards it. Until the convergence actually happens, there are still many critics about the accounting treatment at the same subject under U.S GAAP and IFRS. Example of this is the argument about whether U.S GAAP should allow upward revaluation of non-financial asset of IFRS which was described in details on the article “Upward Revaluation of Non-financial” in the CPA journal November 2012 by David Sardone and Tom Tyson.…show more content…
In the accounting perspective about these assets held for sale, GAAP suggests that “companies should measure them as the “is the lower of the carrying amount or the fair value, minus the cost to sell. In addition, impairment losses may be recovered and recognized in profit and loss. Newly acquired held-for-sale assets are measured at fair value, minus the cost to sell at the acquisition date” (Sardone and Tyson, 25); IFRS also recommends a very similar treatment in valuing the non-financing assets: property, plant, and equipment. It rules that the relevant value for non-financing asset is equal to the purchase price of the asset, minus any accumulated depreciation and any accumulated impairment losses if occurs. Also, the two standards suggest compatible requirements that to be considered under impairment, assets have to be in these situations: “a significant decrease in the fair value of an asset; a significant change in the extent or manner in which an asset is used; a significant adverse change in legal factors or in the business climate that affects the value of an asset; an accumulation of costs significantly in excess of the amount originally expected to acquire or construct an asset; a projection or forecast that demonstrates continuing losses associated with an asset” (Kieso, Weygandt and Warfield, 618). In addition of using the cost model which measures the value of non-financing assets as the difference between
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