Asked by shakif seymour on May 22, 2024
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Donner Company is selling a piece of land adjacent to its business. An appraisal reported the market value of the land to be $120,000. Focus Company initially offered to buy the land for $107,000. The companies settled on a purchase price of $115,000. On the same day, another piece of land on the same block sold for $122,000. Under the cost concept, what amount will be used to record this transaction in the accounting records?
Cost Concept
An accounting principle that states all assets and services purchased by a company should be recorded at their cost price.
Market Value
The present rate at which a service or asset may be purchased or sold in the market.
Accounting Records
Documents and books that keep systematic financial data and transactions of a person, company, or entity.
- Convey the criticality and consequences of essential accounting notions such as objectivity, unit of measure, and the cost principle.
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Learning Objectives
- Convey the criticality and consequences of essential accounting notions such as objectivity, unit of measure, and the cost principle.