Equipment with an estimated market value of $55,000 is offered for sale at $75,000. The equipment is acquired for $20,000 in cash and a note payable of $40,000 due in 30 days. The amount used in the buyer's accounting records to record this acquisition is
A) $55,000
B) $60,000
C) $20,000
D) $75,000

Question

Quizplus · Accepted Answer

The amount used in the buyer's accounting records to record this acquisition should be the total amount paid, which is $60,000 ($20,000 in cash + $40,000 note payable). The listed market value of $55,000 is irrelevant to the accounting entry. The listed sale price of $75,000 is also irrelevant because it is not the actual amount paid.

Equipment with an Estimated Market Value of $55,000 Is Offered