Question

On june 25, ritts roofing extended an offer of $250,000 for land that had been priced for sale at $300,000. on july 9, ritts accepted the seller's counteroffer of $275,000. on october 1, the land was assessed at a value of $280,000 for property tax purposes. on december 22, ritts was offered $305,000 for the land by a national retail chain. at what value should the land be recorded in ritts roofing's records?

Answer 1

The answer is $275,000 this is because this is the last accepted offer on the land. All others are appraisals or offers but not the recorded value of the land.

Answer 2

Answer: The correct answer is $275,000.

Explanation: This question is an example of the cost principle. In accounting, property is recorded at the actual cost that it was purchased for. The appraisal amount and offer amounts are not used to record the value of the land. In this situation, the land should be recorded in their records at $275,000, which is the amount that they purchased the land for.