A plant site donated by a city to Pluto Company, which plans to open a new factory, should be recorded on Pluto's books at

Question

Quizplus · Accepted Answer

The plant site should be recorded on Pluto's books at its fair market value, which represents the most accurate estimation of the actual value of the asset. The nominal cost of taking title to it may not reflect its true value, and assigning a value based on the company's directors' estimation may not be objective or reliable. Footnoting the asset at zero value might not accurately reflect its usefulness to the company, and it may not comply with generally accepted accounting principles. Therefore, fair market value is the most appropriate choice.

A Plant Site Donated by a City to Pluto Company