Analysis of the Impact of PP&E Two Subsequent Measurement Models on Enterprise Financial Reporting and Financial Performance

Abstract: Measurement based on PP&E has been controversial in accounting in recent years. This paper analyzes the contributions and risks of two subsequent measurement models of PP&E to the financial reporting and performance of enterprises. It also explores the relationship between the two models. This study aims to provide a reference for companies in the selection of subsequent measurement model of PP&E. According to previous research, the cost model provides more timely and understandable information for financial reporting and reduces the cost of preparing reports. It also improves the objectivity and verifiability of financial performance. However, the cost model may not show the true value of a company's PP&E. The revaluation model provides more relevant information for financial reporting and reduces information asymmetry. It also positively affects the company's future financial performance. However, revaluation models are highly subjective, susceptible to bias manipulation, and can lead to misleading information due to value reversal. The relationship between the two models can be explained as a slow evolution from the cost model to the revaluation model, but not a complete replacement.