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 $15,000 and the building at $85,000,this accounting choice would be considered ________.

Question

Quizplus · Accepted Answer

Choosing the higher appraisal value for the land ($15,000) and thus a lower value for the building ($85,000) that will be depreciated is considered an aggressive accounting choice. This is because it results in a higher asset value being recorded for the land, which does not depreciate, and a lower starting value for depreciation expenses, potentially enhancing the company's financial appearance in the short term.

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