A building with an appraisal value of $147,000 is made available at an offer price of $152,000. The purchaser acquires the property for $35,000 in cash, a 90-day note payable for $45,000, and a mortgage amounting to $65,000. The cost basis recorded in the buyer's accounting records to recognize this purchase is
A) $147,000
B) $152,000
C) $145,000
D) $110,000

Question

Quizplus · Accepted Answer

The cost basis recorded in the buyer's accounting records to recognize this purchase is the total amount paid for the property, which is $35,000 + $45,000 + $65,000 = $145,000. This is lower than the offer price of $152,000 but represents the actual cost paid by the buyer. The appraisal value of $147,000 is not relevant for determining the cost basis.

A Building with an Appraisal Value of $147,000 Is Made