Following U.S.GAAP,land is carried at historical cost
A)at all times.
B)never.
C)unless the fair value of the land has decreased below the original cost and the land meets the recoverability test.
D)unless the fair value of the land has increased above the original cost and the land meets the recoverability test.
E)none of the above

Question

Quizplus · Accepted Answer

According to U.S. GAAP, land is carried at historical cost unless the fair value of the land has decreased below the original cost and the land meets the recoverability test. In such cases, the land is written down to the lower fair value, and the impairment loss is recognized in the income statement. If the fair value of the land subsequently increases, the asset is not written up, and the increase is recognized as a gain in the income statement. Therefore, choice C is the correct answer.

Following U.S.GAAP,land Is Carried at Historical Cost