In 1990, Johnson Company purchased a building for $200,000. In 2017, a real estate professional says the building has a fair value of $1,000,000. In 2017, a similar building down the street recently sold for $900,000. What value, before consideration of accumulated depreciation, is reported for the building on the balance sheet at December 31, 2017?

Question

Quizplus · Accepted Answer

The building is reported at its historical cost of $200,000 on the balance sheet, as per the cost principle in accounting, which states that assets should be recorded at their original purchase price.

In 1990, Johnson Company Purchased a Building for $200,000