Question

Land was acquired in 2021 for a future building site at a cost of $40,800. The assessed valuation for tax purposes is $27,900, a qualified appraiser placed its value at $48,900, and a recent firm offer for the land was for a cash payment of $44,200. The land should be reported in the financial statements at:

Answer 1

Answer:

The land should be reported in the financial statement at $40,800

Explanation:

At the time the fixed asset is being recorded, it should be recorded at the purchase cost or historical price.

Since the land was purchased at $40,800 according to the question, also it is assessed for tax purpose at $27,900 and was valued at $48,900 by other appraisers including an offer of cash payment of $44,200.

But at the time of recording, the balance sheet would show at the price of $40,800