Finally, there is a plot of land that she wishes to invest in that is close to t

Question

Finally, there is a plot of land that she wishes to invest in that is close to the freeway, and would be a good location in terms of shipping and receiving their products. However, there is the concern that the State of Ohio may expand the number of lanes on the interstate. Please explain to her how the State would be able to take control of her property and the subsequent accounting effects to the financial statements. She doesn’t really understand how to account for gains and losses.

please explain the accounting jounral enties for when the goverment takes over your proprety at fair value, and how this has a gain or loss effec on financial statemtents

Explanation / Answer

Eminent domain is the power of government to take private land for public use. This power is limited by the federal Constitution and by state constitutions -- when the government does take private property for public use, it must fairly compensate the owner for the deprivation. Sometimes the operation of eminent domain is a straightforward matter, with the government providing the landowner a fair price, and the landowner yielding the property to public use. At other times, however, government and the landowner may disagree over whether a taking has occurred, and how much compensation is due.

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