Asset Revaluation Regulations
25 Pages Posted: 10 Jan 2009
Date Written: January 10, 2009
GAAP mandates a variety of departures from historical cost valuation. We consider a simple model that produces corresponding variety, depending on prevailing regulatory objectives and economic conditions. The model entails entrepreneurial investment in an asset followed by private information about asset value that cannot be communicated. A lemons problem arises in the asset resale market, creating a role for mandated disclosure in the form of audited asset revaluation.
Keywords: asset revaluation, regulation
JEL Classification: D80, K20
Suggested Citation: Suggested Citation