Alpha,Inc.bought land and a new warehouse for $100,000.Because Alpha needs to separate the cost of the land (which will not be depreciated)from the cost of the building (which will be depreciated),Alpha got two independent appraisals.The first appraiser said the land was worth $10,000.The second appraiser said the land was worth $15,000.If Alpha records the land at $10,000 and the building at $90,000,this accounting choice would be considered ________.

Question

Quizplus · Accepted Answer

This accounting choice would be considered conservative, as Alpha is choosing to value the land at the lower appraisal ($10,000) rather than the higher appraisal ($15,000). This approach is more cautious and less likely to overstate assets on the balance sheet, which can be beneficial for investors and stakeholders.

Alpha,IncBought Land and a New Warehouse for $100,000