U.S. accounting standards at one time contained a requirement that certain large companies disclose current values for inventories and fixed assets. Such disclosure included dollar amounts for cost of goods sold and depreciation that were based on current instead of historical cost. This requirement, however, was quickly abandoned in response to heated controversy.
REQUIRED:
a. Build an argument against requiring current values on the balance sheet.
b. Consider the usefulness of historical costs for decision-making purposes, and build a case for requiring current values on the balance sheet.
c. Which of the two arguments do you fine most conbincing?