Final answer:
The plants of XYZ company, with a current fair value of $460 million, will likely be reported at their historical cost of $275 million on the balance sheet, unless a revaluation has occurred under an accounting standard that permits such reporting, such as IFRS.
Step-by-step explanation:
The XYZ company's plants, which originally cost $275 million, now have a current fair value of $460 million. The plants will be reported as assets on XYZ company's balance sheet. According to the cost principle, assets are initially recorded at their cost (i.e., the acquisition cost of the asset). Over time, the assets may appreciate in value; however, this increase in fair value is not typically recorded in the financial statements unless a revaluation is permissible and a decision is made to do so, in compliance with the accounting principles that the company follows, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).
Under GAAP, assets are generally carried at historical cost, and increases in value are not recorded until the asset is sold. Under IFRS, there is a revaluation model that allows for assets to be reported at fair value, but this is an option, not a requirement, and entails a revaluation process with its own set of rules and disclosures. Therefore, without further information on the accounting principles XYZ company adheres to or any indication that a revaluation has occurred, it's most likely that the plants will be reported at their historical cost of $275 million.