Question

If a company is considering the purchase of a parcel of land that was acquired by the seller for $86,000 is offered for sale at $152,000, is assessed for tax purposes at $96,000, is considered by the purchaser as easily being worth $142,000, and is purchased for $139,000, the land should be recorded in
the purchaser's books at:__________.

Answer 1

Answer:

$139,000

Explanation:

The value of an asset is recorded in the book as the price at which it was acquired. The cost of the land will be recorded as the price which it was paid for or the purchase price.  

In asset acquisitions, the value of land includes the purchase price plus all other relevant expenses such as legal fees, commissions, and survey fees. Discounts received are deducted from the purchase price before the price is recorded in the books. An organization will value and depreciate its assets based on the price it purchased them.