Company N has a fiscal year end of December 31st. Company N has operated a brewery on a piece of land that the company owns since February, 2017. The land was rezoned to allow both residential and industrial use on November 1, 2021. The highest and best use of the land and buildings of the brewery based on current prices at the end of the fiscal year would be to demolish the brewery and build residential property. Company N is planning on using the land and buildings to continue operating the brewery. This is consistent with Company N’s long term strategy and

Company N has a fiscal year end of December 31st. Company N has operated a brewery on a piece of land that the company owns since February, 2017. The land was rezoned to allow both residential and industrial use on November 1, 2021. The highest and best use of the land and buildings of the brewery based on current prices at the end of the fiscal year would be to demolish the brewery and build residential property. Company N is planning on using the land and buildings to continue operating the brewery. This is consistent with Company N’s long term strategy and

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 55P

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Company N has a fiscal year end of December 31st. Company N has operated a brewery on a piece of land that the company owns since February, 2017. The land was rezoned to allow both residential and industrial use on November 1, 2021. The highest and best use of the land and buildings of the brewery based on current prices at the end of the fiscal year would be to demolish the brewery and build residential property. Company N is planning on using the land and buildings to continue operating the brewery. This is consistent with Company N’s long term strategy and the core operations of Company N. Should the financial statements of Company N reflect the fair value of the land being used as a brewery or the land building residential property? Explain your answer.
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