Asked by Furqaan Sayed on Apr 29, 2024
Verified
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
Market Value
The ongoing rate at which an asset or service is offered for buying or selling in a market.
Note Payable
A written promise to pay a specified sum of money, plus interest, to a creditor at a future date.
Cash
A form of currency that includes coins and paper notes, used by companies to conduct transactions or stored as part of their liquid assets.
- Gain an understanding of elementary accounting theories, including the principle of business entities and the notion of cost.
Verified Answer
AH
Autumn HamiltonApr 30, 2024
Final Answer :
B
Explanation :
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.
Learning Objectives
- Gain an understanding of elementary accounting theories, including the principle of business entities and the notion of cost.
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