Equipment with an estimated market value of $30,000 is offered for sale at $45,000. The equipment is acquired for $15,000 in cash and a note payable of $20,000 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is
A) $30,000
B) $35,000
C) $15,000
D) $45,000

Question

Quizplus · Accepted Answer

The actual cost of the equipment is $35,000 ($15,000 + $20,000). Therefore, the amount used in the buyer's accounting records should be the actual cost of the equipment, which is $35,000. The market value and the offered price are not relevant in determining the accounting value of the equipment.

Equipment with an Estimated Market Value of $30,000 Is Offered