A plant site donated by a city to Rupp Company, which plans to open a new factory, should be recorded on Rupp's books at

Question

Quizplus · Accepted Answer

The plant site should be recorded on Rupp Company's books at its fair market value. This is because the plant site was not purchased by the company, but rather donated by the city. Therefore, the company did not incur any cost to acquire the plant site, and thus a nominal cost of taking title to it would not accurately reflect its value. Zero value would also not be appropriate, as the plant site clearly has value as it is being used to establish a new factory. The value assigned by the company's directors may not accurately reflect the fair market value of the plant site.

A Plant Site Donated by a City to Rupp Company