Under the going concern assumption, reporting assets, such as land, at their cost may be more appropriate than reporting land at its fair value.

Question

Quizplus · Accepted Answer

The going concern assumption implies that a business will continue to operate indefinitely and not be forced to halt operations and liquidate its assets in the near future. Under this assumption, it is more appropriate to report long-term assets like land at their historical cost rather than fair value, as it reflects the cost at the time of acquisition and provides a stable basis for accounting, avoiding fluctuations that come with changing market values.

Under the Going Concern Assumption, Reporting Assets, Such as Land