Ten years ago a corporation purchased a building for $160,000. At that time, the corporation felt that the building was worth $185,000. The current market value of the building is $430,000. The building has been assessed at $405,000 for property tax purposes. At which amount should the corporation record the building in its accounting records?

Question

Quizplus · Accepted Answer

In accounting, assets are recorded at their historical cost. Therefore, the building should be recorded at its purchase price of $160,000, not its current market value or assessed value for tax purposes.

Ten Years Ago a Corporation Purchased a Building for $160,000