Question

On May 20, White Repair Service extended an offer of $108,000 for land that had been priced for sale at $140,000.On May 30, White Repair Service accepted the seller’s counteroffer of $115,000. On June 20, the land wasassessed at a value of $95,000 for property tax purposes. On July 4, White Repair Service was offered $150,000for the land by a national retail chain. At what value should the land be recorded in White Repair Service’srecords?

a. $108,000
b. $95,000
c. $140,000
d. $115,000

Answer 1

Answer:

d. $115,000

Explanation:

According to the historical cost principle, the fixed assets should be reported at the original cost or historical price at the time of the recording of the fixed assets.  

Since there is the various amount given in the question but the price at which the company accepted the seller counter offer should be recognized i.e $11,5000.