Calamari Associates bought land for $1,200,000 in 1982. In 2007, the land was appraised at $1,795,000. The land would appear on the company's books in 2007 at?

a) $595,000 b) $1,200,000 c) $1,795,000 d) $2,995,000


** My answer was D. I'm not sure if this is correct. I added $1,200,000 and $1,795,000 Ca n someone please verify this. Thank you.

The answer is (b) , based on historical values.
The answer is (c) , based on
appraised values.
You should refer to THE ESTIMATED
REPLACEMENT VALUE THEORY.
Professor Raymond Chambers,
SYDNEY , University . Australia.
For the full accounting treatment.

According to IAS 16 Property Plant and Equipment are reported at appraised values if the appraisal is carried out in accordance with the guidelines stated in IAS 16

rehmanvohra,

Two simple questions:-
1) Have you ever heard of Professor R
Chambers of Sydney ?
2) Have you ever come across
The PHILIPS System of Accounting?

Roland.

rehmanvohra,

Two simple questions:-
1) Have you ever heard of Professor R
Chambers of Sydney ?
2) Have you ever come across
The PHILIPS System of Accounting?

roland.

I am afraid NO on both counts. I did try in vain to Google search on Prof. Chambers. It would have helped me a lot if you had mentioned relevant website. It would add to the knowledge of every one using this forum.

I am sure Prof. Chambers' views must be universally acceptable and in accordance with IFRSs.

The PHILIPS System of Accounting
Has been using the appraisal valuation
Of assets for the last 80 years in 65
Different countries.
Their headquarters are in a place called Einhhoven, Holland.
There are textbooks written by Professor Ray Chambers.
You should try and get hold of them.

The PHILIPS System of Accounting
has been using the appraisal valuation
of assets for the last 80 years in 65
different countries.
Their headquarters are in a place called Einhhoven, Holland.
There are textbooks written by Professor Ray Chambers.
You should try and get hold of them.

You could have saved me a lot of time if you had given the web addresses of both - Philips and Prof. Chambers.

Well, we do have the issue of having no idea where this person is located or whether they care what Australia has been doing for the past 80 years. As of 2007, U.S. GAAP would have kept the land at cost.

So, does anyone actually know what set of rules OP is following? Doubtful.

blue86, without knowing where you are, as you can see, we really can't give you a definitive answer.

What I can tell you is that you would never add them. If you purchased a house 20 years ago at $80,000 and today its value is $150,000, the value went up $70,000. You wouldn't add $80K and $150K - that doesn't make sense. So regardless of the rules, it just mathematically doesn't make sense to add them.