Rental property owned by Corp. Got a new appraisal and bank refinanced the mortgage. Do you also update the Land and Buildings values on the balance sheet to match the new appraisal value or keep them at cost? And if you do update them, do you put the increase in the values to GIFI 3542 (Appraisal Surplus), or 3580 (Accumulated other comprehensive income), or …?
Is it a company that’s required to follow IFRS? Or even ASPE? Otherwise, probably not. It’s extra work for you, and I imagine you’ll bill your client for that work, so unless the client WANTS you to, don’t do it. For most small businesses you don’t have to follow any recognized standard (though it’s best to keep to the old GAAP concepts). Just record the assets at acquisition cost, and don’t mark-to-market. Those GIFI codes exist for companies that must follow IFRS.
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I have no interest in IFRS. But there is absolutely no provision in ASPE to add appraisal increments to assets other than portfolio investments traded on a stock exchange so that the market value can be independently verified. Years ago, there was a small window of opportunity when you could jack up the accounting value of other assets such as land & buildings, but you had to keep that out of schedule 8 on the T2. There was an idea at one time to bring assets more in line with current values. But the mechanics of this were never worked out and, in any case, once started, it would have to become an annual exercise. Way too expensive. Way too open to manipulation. So, except for investments in listed securities, accounting cost is historical cost.
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