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:   200 word  

1. 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.