An investment property is measured initially at cost at the time the cost is incurred, which is equivalent to fair value, assuming that
A) management's intent when purchasing the property is clearly known.
B) the acquisition was the result of an arm's-length exchange transaction.
C) the investment property does not require additional expenditures before it can be used.
D) The cost of the property and its fair value are the same.

Question

Quizplus · Accepted Answer

The acquisition being the result of an arm's-length exchange transaction ensures that the cost at which the investment property is initially measured is equivalent to its fair value, as it reflects the price agreed upon by willing parties who are not in a position to influence each other.

An Investment Property Is Measured Initially at Cost at the Time