Land was acquired in 2016 for a future building site at a cost of $40,000.The assessed valuation for tax purposes is $27,000,a qualified appraiser placed its value at $48,000,and a recent firm offer for the land was for a cash payment of $46,000.The land should be reported in the financial statements at:
A)$40,000.
B)$27,000.
C)$46,000.
D)$48,000.

Question

Quizplus · Accepted Answer

The land should be reported at its historical cost of $40,000, as per the cost principle in accounting, which states that assets should be recorded at their original purchase price.

Land Was Acquired in 2016 for a Future Building Site