Company''s products slumped and the company''s earnings

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It is the end of 2010 and you are an accountant for the Stone Company. During 2010, sales of the company's products slumped and the company's earnings are expected to be much less than those of 2009. The president comes to you with an idea. He says, Our Company's property, plant, and equipment cost $300,000, and that is the amount we usually report on our balance sheet. However, I just had these assets appraised by an independent appraiser, and she says they are worth $400,000. I think that the company should report the property, plant, and equipment at this amount on its December 31, 2010 balance sheet, and should report the $100,000 increase in value as a gain on the 2010 income statement. If we use this approach, it will show how much our company is really worth and increase our earnings. This will make our stockholders happy. What do you think?

Required:
Prepare a written response to the president.

Reference no: EM13874477

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