Answer:
It is logically better to use the fair value approach because the historical value of the property is multiple times less than the present fair value of the property.
Explanation:
The difference between historical accounting principle and fair value accounting principle is that the historical accounting principle considers the value at which the property was purchased.
For example in the given question [tex]$\mathrm{XYZ}$[/tex] company brought the real estate property at [tex]$\$ 30,000$[/tex] so into the historical accounting principle the value of the property is 30000 US dollars. Whereas on the other hand the fair accounting principle considered as the the actual value of the property as per the present value.
For example in the given question [tex]$X Y Z$[/tex] company concludes that the expected market value of the price is dollar [tex]2[/tex] million. So in the given case, I totally agree with the financial manager that the the value of the property must be estimated according to the fair value accounting principle rather than historical accounting principle.
Learn more about fair value accounting, refer :
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