The president of your firm, Lesky and Lesky, has little background in accounting. Today, he…

The president of your firm, Lesky and Lesky, has little background in accounting. Today, he walked into your office and said, ‘‘A year ago we bought a piece of land for $100,000. This year, inflation has driven prices up by 6%, and an appraiser just told us we could easily resell the land for $115,000. Yet our balance sheet still shows it at $100,000. It should be valued at $115,000. That’s what it’s worth. Or, at a minimum, at $106,000.’’ Respond to this statement with specific reference to the accounting principles applicable in this situation, be sure to state the necessary effects.