Burr Publishers purchased a building on March 20, 20X1, for $160,000. Other amounts related to this purchase are as follows:Price listed by seller on Jan. 1, 20X1, $180,000Burr Publishers' initial offer to buy on Jan. 31, 20X1, $140,000Purchase price on Mar. 20, 20X1, $160,000Estimated selling price on Dec. 31, 20X3, $220,000Assessed value for property taxes, Dec. 31, 20X3, $190,000Which amount related to this purchase should be recorded in the accounting records? (A) 220,000 (B) 180,000 (C) 140,000 (D) 160,000

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Business

Melany Gamble

30 January, 09:37

Burr Publishers purchased a building on March 20, 20X1, for $160,000. Other amounts related to this purchase are as follows:Price listed by seller on Jan. 1, 20X1, $180,000Burr Publishers' initial offer to buy on Jan. 31, 20X1, $140,000Purchase price on Mar. 20, 20X1, $160,000Estimated selling price on Dec. 31, 20X3, $220,000Assessed value for property taxes, Dec. 31, 20X3, $190,000Which amount related to this purchase should be recorded in the accounting records? (A) 220,000 (B) 180,000 (C) 140,000 (D) 160,000

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Answers (1)

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Devin Benitez · Answer 1

(D) 160,000

Explanation:

The companies reports its land and buildings at the purchase cost, that it's the price paid when their were acquired, in this case 160,000, the price listed by the seller it's just a reference to buyer and initiate the process of negotiation to the final price, it has not effect on the company balance sheets. On the other side the assessed value it's a reference price to the goverment to collect taxes, this taxes are basis on this assessed value.