Authors : Fidelix Gilgik Wambutda

Volume/Issue : Volume 11 - 2026, Issue 6 - June

Google Scholar : https://tinyurl.com/ymuc4p42

Scribd : https://tinyurl.com/2j75xurc

DOI : https://doi.org/10.38124/ijisrt/26jun1946

Note : A published paper may take 4-5 working days from the publication date to appear in PlumX Metrics, Semantic Scholar, and ResearchGate.

Abstract : Financial accounting has traditionally measured land under the historical cost convention, a practice that leaves the reported carrying amount increasingly disconnected from a parcel's true market worth as surrounding infrastructure investment and locational advantages accumulate over time. This paper proposes the Locational Infrastructural Index (LII), an original composite instrument developed to systematically capture the infrastructure and locational characteristics that drive land appreciation and to convert that measurement into a standardized basis for recognizing land value in financial statements. Grounded in location theory, hedonic pricing theory, and the fair value hierarchy set out in International Financial Reporting Standard (IFRS) 13, the LII is built from eight measurable subcomponents whose relative weights are derived through principal component analysis. Applying illustrative data drawn from four land zones situated along a Nigerian urban and periurban corridor, the paper shows how the LII can be used to revalue land parcels under IAS 16 and IFRS 13, quantifies the gap between cost model carrying amounts and LII adjusted fair values across the zones, and sets out a Standardized Value Recognition Framework (SVRF) through which LII outputs can be incorporated into financial reporting practice. The analysis shows that the cost model understates land values in zones with high LII scores by a mean factor of 2.49, while inflating the relative fiscal weight of zones with low LII scores, an asymmetry that generates information gaps capable of distorting capital allocation, lending judgments, and the management of public assets. The paper's contribution to the literature on asset valuation and financial reporting standards lies in the original index itself, the accompanying measurement framework, and a policy relevant accounting instrument that can be applied in practice.

Keywords : Locational Infrastructural Index, Land Valuation, Fair Value Accounting, IAS 16, IFRS 13, Hedonic Pricing, Land Appreciation, Financial Reporting, Nigeria, Real Estate Accounting.

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