While discussing the values reported on the statement of financial position for land and buildings, Jing Zhao, owner of Nobrex Ltd., said the following: “Land and buildings should not be recorded separately. They should be treated as a group of related assets. If you view them as a group, no depreciation should be charged on our buildings, because the increase in the value of our land each year more than makes up for any decline in the value of the buildings. Our company is located in a booming commercial area, and land values are rising all the time. In fact, even the value of our buildings has probably been increasing, rather than decreasing.” Comment on the issues raised by Jing Zhao.
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