Reference no: EM132653309

Question 1: Under U.S. GAAP, long-lived assets, such as real estate are reported on the balance sheet at the original purchase price of the asset. In the event that the value of a real estate becomes "impaired"-that is, the current market value of the real estate falls below its original purchase price and is unlikely to recover the lost value in the foreseeable future-the asset's book value is written down to the lower current value and a loss is recorded on the firm's income statement. Under no circumstances, however, can a firm write up the value of its real estate assets in the vent that current market value exceeds original purchase price. Discuss whether U.S. GAAP should be changed to allow a symmetric treatment of asset value increases and decreases. What are the implications of this asymmetry in the accounting treatment of assets (such as real estate) for U.S. financial statement users?