Sam and his wife Ann purchased a home in Lubbock, Texas, in 1980 for $100,000. Their original home mortgage payment was $90,000. The house has a current market value of $175,000 and a replacement value of $200,000. They still owe $55,000 of their home mortgage payment. In their current balance sheet, their home will be reflected as:

Question

Quizplus · Accepted Answer

In financial accounting, assets on a balance sheet are typically recorded at their current market value, and liabilities are recorded based on the outstanding amount owed. Therefore, the house would be listed as a $175,000 asset for its current market value, and the mortgage liability would be $55,000, reflecting the amount still owed.

Sam and His Wife Ann Purchased a Home in Lubbock