Good Company paid cash to purchase mineral rights on a large parcel of land. Which of the following choices accurately reflects how this event would affect the horizontal financial statements model?

Question

Quizplus · Accepted Answer

The purchase of mineral rights is a long-term investment and should be recorded as a noncurrent asset on the balance sheet. This would increase the total assets and have no effect on the total liabilities or equity, resulting in an increase in total assets and no change in total liabilities and equity. Therefore, Option C accurately reflects the impact on the horizontal financial statements model.

Good Company Paid Cash to Purchase Mineral Rights on a Large