Question

According to the ________, acquired assets should be recorded at the amount actually paid rather than at the estimated market value.

Answer 1

According to the economic entity concept acquired assets should be recorded at the amount actually paid rather than at the estimated market value.

What is economic entity concept?

The economic entity principle is a fundamental accounting concept that requires businesses to be considered as distinct legal and financial entities. This means that all financial transactions involving the company should be kept separate from those involving the owner.

An economic entity is one of the assumptions made in generally accepted accounting standards in accounting. An economic entity can be almost any sort of organization or unit in society. Hospitals, businesses, towns, and government organizations are examples of economic entities.

A firm or organization and its owners are regarded separately in accounting. This is known as the entity idea. As a separate economic unit, the company stands apart from other organizations.

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