A building with an appraisal value of $250,000 is made available at an offer price of $180,000.The purchaser acquires the property for $35,000 in cash,a 90-day note payable for $65,000,and a mortgage amounting to $63,000.The cost basis recorded in the buyer's accounting records to recognize this purchase is
A)$250,000.
B)$180,000.
C)$163,000.
D)$100,000.

Question

Quizplus · Accepted Answer

The cost basis recorded in the buyer's accounting records is the total amount paid for the property. In this case, the purchaser paid $35,000 in cash, a 90-day note payable for $65,000, and a mortgage of $63,000 which totals to $163,000. Therefore, the cost basis recorded in the buyer's accounting records is $163,000, not the appraisal value ($250,000) or the offer price ($180,000).

A Building with an Appraisal Value of $250,000 Is Made