This discussion brings to mind the "mark to market" debate involving the bankers.  Even though the actual market price of their securities is much less than they gave for them they want to value them at their purchase price. 

As plowboy pointed out valuing assets at purchase price (or purchase price less depreciation) can distort the financial picture it presents by both overstating or understating net worth. 

The purpose of the financial statement is to give an accurate snapshot of owners equity at specific point in time while adhering to accounting guidelines.  If those accounting guidelines are manipulated (as we have seen in the suspension of mark to market which was pushed through by the banks) there is a distortion of owners equity and the financial health of the business.