Hank bought a small ranch for $300,000 in 2010.In 2017,oil is discovered on neighboring property.The county assessor re-valued Hank's property at $1,550,000.Hank does not recognize any income due to the

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Quizplus · Accepted Answer

The realization concept states that revenue should be recognized when it is realized or earned, regardless of whether cash has been received or not. The discovery of oil on the neighboring property and the resulting increase in Hank's property value does not qualify as realized income for Hank, as there has been no sale or exchange of the property. Therefore, Hank does not recognize any income from the increase in property value, and the Realization Concept best explains why.

Hank Bought a Small Ranch for $300,000 in 2010