Land was acquired in 2018 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: (A) $40,000.

(B) $27,000.

(C) $46,000.

(D) $48,000.

Question

Business

Whitney Weeks

7 January, 19:14

Land was acquired in 2018 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: (A) $40,000.

(B) $27,000.

(C) $46,000.

(D) $48,000.

+2

Answers (1)

Know the Answer?

Maeve Graves · Answer 1

(A) $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. Moreover, for the tax purpose, the land is valued at $27,000 and the qualified appraiser appraise the value at $48,000. The cash payment is also offered for $46,000

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