Week 3: Fair value vs cost

Question 1

In tax law, what percent of a property depreciation goes to land and what percent goes to building

Answer 1

20% of a property goes to land, 80% goes to the building

Question 2

Fair value vs cost

Answer 2

Used to value assets

Fair value is how much it currently is worth

Cost means that how much you paid for it

Question 3

For tax purposes, residential and commercial real estate depreciate in…

Answer 3

residential 27 years

commercial 39 years

Question 4

US GAAP vs IFRS (regarding depreciation)

Answer 4

US GAAP only allow historical cost

IFRS allows cost or fair value technique