Identify the accounting concept that was violated in each of the following situations.1. Pastel Paint Company purchased land two years ago at a price of $250,000. Because the value of the land hasappreciated to $400,000, the company has valued the land at $400,000 in its most recent balance sheet.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Identify the accounting concept that was violated in each of the following situations.
1. Pastel Paint Company purchased land two years ago at a price of $250,000. Because the value of the land has
appreciated to $400,000, the company has valued the land at $400,000 in its most recent
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