Land Valuation: Relevance vs. Reliability

This paper will explore the topic of land valuation, as it is affected by the relevance of fair value versus the reliability of historical cost. In a world where land value is both on the incline and our planet is being destroyed by climate change and other environmental factors, it is more important than ever to begin considering its treatment on the financial statements. Through the functional paradigm research method, this paper analyzes this topic compared to current standards (IAS 16, IAS 40, and international standards), associated industries (MPAC, real estate, CRA regulations, and banking regulations), and industry professionals input (via a survey created for this paper). As a result of the ongoing research and the current economic landscape, it is recommended that land be recorded at its fair value using the revaluation model to provide the most relevant economic picture of an organization’s financial statements to its users.