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 or cannot be replaced with similar assets or for which no comparable or similar assets are currently available for purchase.
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. company's financial statements? Explain.
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, so does this affect the qualitative concept of comparability to U.S. companies’ financial statements? The answer is yes because the qualitative concept of comparability uses the same method for defining profits, losses, and worth of items. The difficulty of assigning value or price on the equipment which could be well over twenty years old is a concern depending on models and if there is any replacements. However, there is also a probability that the company has no choice either; for the fact that, if there is no equipment, the company may not be able to operate leading to no profits. A great example of this is manufacturing companies or plants that the united states have in foreign countries. There are still a lot of factories that continue to work...