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8 May, 18:31

Eight years ago, Bravo Company purchased land for $170, 000. The current fair market value of the land is $421,000. The rate of general inflation experienced during the 8-year period has averaged 10% per year. At the time the land was purchased, Bravo intended to hold it for 20 years. At what amount should the land be carried on Bravo's books today

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  1. 8 May, 19:19
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    Answer: $170,000

    Explanation:

    According to the historical cost concept, the original cost value of a asset (i. e. land) should be recorded in the books. The original cost refers to the cost of a asset at the time of purchasing. As per the principle of historical cost, assets are always recorded as a original cost or historical cost or acquisition cost.

    But when a person sold the asset then he will consider the fair market value.
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Home » Business » Eight years ago, Bravo Company purchased land for $170, 000. The current fair market value of the land is $421,000. The rate of general inflation experienced during the 8-year period has averaged 10% per year.
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