Case 3-5: International versus U.S. Standards in Ch. 3 of
Financial Accounting Theory and Analysis Case 3-5 International
versus U.S. Standards 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. Required: a. 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.