Which concept should be applied when reporting a piece of land that was bought for $50,000 five years ago, and which would probably now sell for $80,000?
A) The cost principle.
B) The asset principle.
C) The separate entity concept.
D) The monetary concept.

Question

Quizplus · Accepted Answer

The cost principle states that assets should be recorded at their original purchase price, so in this case the piece of land would be reported at its original cost of $50,000, even though its current market value is likely higher.

Which Concept Should Be Applied When Reporting a Piece of Land