Ten years ago,a company purchased a building for $190,000.At that time,the company felt that the building was worth $215,000.The current market value of the building is $450,000.The building has been assessed at $425,000 for property tax purposes.At which amount should the company 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 $190,000, not its current market value or assessed value for tax purposes.

Ten Years Ago,a Company Purchased a Building for $190,000