Question

Burr Publishers purchased a building on March 20, 20Y1, for $160,000. Other amounts related to this purchase are as follows: Price listed by seller on January 1, 20Y1 $180,000 Burr Publishers' initial offer to buy on January 31, 20Y1 $140,000 Purchase price on March 20, 20Y1 $160,000 Estimated resale price on December 31, 20Y3 $220,000 Assessed value for property taxes, December 31, 20Y3 $190,000 Which of the following amounts should be recorded in the accounting records related to this purchase? 1. $220,000 2. $180,000 3. $160,000 4. $140,000

Answer 1

Answer:

3. $160,000

Explanation:

The fixed assets should be reported at purchase cost or historical price or acquired price at the time of recording of the fixed assets, since the building was purchased at $160,000 in the case and various other sums relevant to that purchase are also made.

In addition, the value of the assessments for property taxes is also done, but the balance sheet would show at the purchase price i.e. $160,000 at the time of recording.