Question

On May 19, Easy Repair Service extended an offer of $123,000 for land that had been priced for sale at $141,000. On June 4, Easy Repair Service accepted the seller's counteroffer of $134,000. On October 10, the land was assessed at a value of $201,000 for property tax purposes. On February 5 of the next year, Easy Repair Service was offered $214,000 for the land by a national retail chain.
At what value should the land be recorded in Easy Repair Service's records?

Answer 1

Answer:

$134,000.

Explanation:

According to the rules of GAAP,  the asset's value recorded in the books is the cost at which it was acquired. The recorded value becomes the assets book value. For tangible assists such as land, motor vehicles, and buildings, the book value will comprise the actual assets' cost plus all other acquisition related costs such as agents fee and surveys fee.

For easy service repairs, the price it paid was $134,000. It accepted the counteroffer, meaning it paid that amount for the land. No other related costs are mentioned. $134,000 is the book value for the land.