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The Use Of Historical Cost And Fair Value For Property And Plant And Equipment Measurement – Evidence From The Republic Of Serbia

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  • Nemanja Karapavlović
  • Vladimir Obradović
  • Jasmina Bogićević

Abstract

The aim of the paper is to reveal how financial statement preparers in the developing and transition country of the Republic of Serbia, behave in situ-ations where they can choose between the valuation model based on historical cost and the valuation model based on fair value. In that regard, we have analysed the subsequent measurement of property and plant and equipment in Serbia. We find that companies are more likely to choose the historical cost model than the revalua-tion model (the model based on fair value) for owner-occupied properties and plant and equipment, and the fair value model rather than the historical cost model for investment properties. The willingness to use the revaluation model for subsequent measurement of owner-occupied proper-ties and plant and equipment varies across different categories of companies, and we find a statistically significant relationship between that willingness and the legal form of the company. We also find that in the notes to their financial statements, a sig-nificant number of companies in Serbia do not disclose adequate information on the model used for subsequent measurement of property and plant and equipment, al-though such information is required by the applicable financial reporting standards.

Suggested Citation

  • Nemanja Karapavlović & Vladimir Obradović & Jasmina Bogićević, 2020. "The Use Of Historical Cost And Fair Value For Property And Plant And Equipment Measurement – Evidence From The Republic Of Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(227), pages 95-118, October –.
    • Handle: RePEc:beo:journl:v:65:y:2020:i:227:p:95-118
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    References listed on IDEAS

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    Cited by:

    1. Stevan Luković & Stefan Vržina & Milka Grbić & Miloš Pjanić, 2021. "The Neutrality Of Taxation Of Investment Projects In Serbia," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 66(230), pages 101-134, July – Se.

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    More about this item

    Keywords

    historical cost; fair value; property; plant and equipment; investment property; accounting policy choice;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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