Question

Land was acquired in 2016 for a future building site at a cost of $40,300. The assessed valuation for tax purposes is $28,000, a qualified appraiser placed its value at $50,000, and a recent firm offer for the land was for a cash payment of $44,000. The land should be reported in the financial statements at:
a) $ 28,000.

b) $ 50,000.

c) $ 44,000.

d) $ 40,300.

Answer 1

Answer:

d) $ 40,300.

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 acquired at $40,300 and the assessed valuation for tax purposes is also done for $28,000 plus there is a qualified appraiser for $50,000 and the cash payment is also made for $44,000

But at the time of reporting, the balance sheet would show at the acquired price i.e $40,300