Homevestors purchased land for $400,000 10 years ago.This year,an independent appraiser assessed the value of the land at $900,000.At what amount should the land be recorded on the company's current financial statements?

Question

Quizplus · Accepted Answer

Under the historical cost principle in accounting, assets are recorded at their cost at the time of purchase. Therefore, the land should be recorded at its original purchase price of $400,000, regardless of its current market value.

Homevestors Purchased Land for $400,000 10 Years Ago