Sung Company purchased land in April 2008 at a cost of $500,000. The estimated market value of

Question:

Sung Company purchased land in April 2008 at a cost of $500,000. The estimated market value of the land is $800,000 as of December 31, 2013. Sung purchased marketable equity securities (bought the of a company that is independent of Sung) in May 2008 at a cost of $340,000. These securities have a market value of $360,000 as of December 31, 2013. Generally accepted accounting principles require that the land be shown on the December 31, 2013, at $500,000, while the marketable equity securities are required to be reported at $360,000.

Required
Write a brief memo that explains the contradiction regarding why requires Sung to report historical cost with respect to the land versus market value with respect to the marketable securities. This answer may require speculation on your part. Use your knowledge about the historical cost and verifiability to formulate a logical response.

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