In 1960,Johnson Company purchased a building for $100,000.In 2013,a real estate professional says the building has a fair value of $1,000,000.In 2013,a similar building down the street recently sold for $900,000.What value is reported for the building on the balance sheet at December 31,2013?
A)$100,000
B)$550,000
C)$900,000
D)$1,000,000

Question

Quizplus · Accepted Answer

The building is reported at its historical cost of $100,000 on the balance sheet, as per the cost principle in accounting, which states that assets should be recorded at their original purchase price.

In 1960,Johnson Company Purchased a Building for $100,000