When historical cost is used to record equipment, it would appear as the
A) original cost on the balance sheet.
B) market value on the balance sheet.
C) residual value on the balance sheet.
D) original cost on the income statement.

Question

Quizplus · Accepted Answer

When historical cost is used, the equipment is recorded at its original cost on the balance sheet. This means that the cost of acquiring the equipment, including any related expenses such as delivery and installation, is the amount that will be reported for that equipment on the balance sheet. The market value or residual value may be different from the historical cost and are not used to record the equipment. The original cost is also not reported on the income statement, as the income statement is focused on the company's revenues and expenses during a specified period of time, rather than the value of its assets.

When Historical Cost Is Used to Record Equipment, It Would