Which of the following statements about the concepts underlying the balance sheet is correct?
A. According to the cost principle, assets are valued at their replacement cost.
B. If an asset's value increases, the increase in value is generally not recorded under GAAP.
C. All events affecting the current value of a company are reported on the balance sheet.
D. A company bought land for $5 million dollars 10 years ago. The land is now worth $15 million. The company should increase the book value of this asset on its balance sheet to reflect its current value.
Answer: B
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