( 3 ) Depreciate land and not the buildings; and
( 4 ) Depreciate the buildings and not the land.
There has been no hard and fast rule in regard to depreciating land and buildings since in the past it was argued that they did not depreciate, thus making Depreciation Accounting unnecessary.
This argument is often advanced by businessmen who have not been able to grasp the accounting theory underlying Depreciation Accounting and the historical Accounting Conventions.
Perhaps the blame for this lies on accountants who either do not really believe their own theories, or are not able to sell, convincingly, their professional beliefs.
Statement 123 makes reference to the fact that in the accounting theo- retical framework, depreciation is not meant to produce a 'value' ( paragraph 21 ).
Depreciation is, of course, as mentioned in paragraph 2 of Statement 123, an attempt to allocate, on a systematic basis, the cost of the assets to the accounting periods during its useful life.
It is, therefore, important, in dealing with Statement 123, not to dis- card it on the basis of this argument, unless you are also prepared to discard the whole body of accounting practice presently in use in Hongkong.
Statement 123 does conform with similar statements issued elsewhere in
the world, and does fall within the historical accounting framework
ramewo which produces the accounts as read today.
Recognising the important fact that Depreciation Accountanting does not attempt to produce value, paragraph 27 states that where assets are revalued, the depreciation provision should be based on the revalued and
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