James Cook Ltd bought a piece of land 10 years ago and the market value of this property is now worth five times its purchase cost.The accountant suggested that James Cook Ltd should revalue the asset.This notion is consistent with the qualitative characteristic of:
A) relevance.
B) faithful representation.
C) understandability.
D) comparability.

Question

Quizplus · Accepted Answer

Revaluing the asset is relevant information as it provides updated information on the current value of the asset for decision-making purposes. Relevance is one of the qualitative characteristics of financial reporting which states that financial information should be capable of influencing decisions by users.

James Cook Ltd Bought a Piece of Land 10 Years