Hyundai Inc. purchased land for W118,000,000 in 2005. At December 31, 2014, an appraisal determined the fair value of the land is W136,000,0000. If Hyundai follows the cost principle, the land will be reported on the statement of financial position at

Question

Quizplus · Accepted Answer

According to the cost principle, assets are initially recorded at their cost. Therefore, Hyundai will report the land on the statement of financial position at its original cost, which is W118,000,000. The appraisal value is not relevant in this case as the cost principle requires companies to record assets at their historical cost.