James had $80 000 in the bank. He used some of this cash to buy a new car for $67 000 on 1 January. James subsequently modified the car and sold it for $78 000 on 1 March. The modifications cost James $1000. The historical cost of the car is:
A) $67 000.
B) $68 000.
C) $77 000.
D) $78 000.

Question

Quizplus · Accepted Answer

The historical cost of the car is the original purchase price, which was $67 000. The cost of modifications and the subsequent sale price do not affect the historical cost of the asset.

James Had $80 000 in the Bank