Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 9 - Reporting and Analyzing Long-Lived Assets - Brief Exercises: BE9-4

Answer

As buildings are depreciated, but land is not, the management has requested to for recording higher amount as the cost of land, to reduce depreciation expense.

Work Step by Step

This not ethical to record higher amount of land and lower amount of building, as the value in the financial statements (Balance sheet) will be different than its actual value, which can mislead the stock holders and investors.
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