Question

Land was acquired in 2021 for a future building site at a cost of $40,000. The assessed valuation for tax purposes is $27,000, a qualified appraiser placed its value at $48,000, and a recent firm offer for the land was for a cash payment of $46,000. The land should be reported in the financial statements at:

Answer 1

Answer:

The land should be reported in the financial statements at $40,000

Explanation:

At the time of recording of the fixed assets, the fixed assets should be recorded at purchase cost or historical price

Since in the question, the land was purchased at $40,000 and moreover, it is assessed for the tax purpose for $27,000 and by other appraisers it was valued at $48,000 plus there is an offer of cash payment for $46,000

But at the time of recording, the balance sheet would show at the purchase price i.e $40,000