ACT 480-Discuss your opinion of using the concepts of relevance and faithful representation

Discuss your opinion of using the concepts of relevance and faithful representation in terms of the difference in treatment between U.S. GAAP and IFRS on the revaluation of impaired assets. Which do you think it is better for the stakeholders of a company and why?

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 permanently impaired. A number of other countries, including Australia, the European Union, Brazil, Mexico, and Singapore, which use IFRS , permit revaluation after an initial impairment 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 10, 20, or more years ago is not meaningful. A primary argument against revaluation is the lack of objectivity in arriving at a current cost estimate, 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.