On April 25, Gregg Repair Service extended an offer of $115,000 for land that had been priced for sale at $140,000. On May 3, Gregg Repair Service accepted the seller's counteroffer of $127,000. On June 20, the land was assessed at a value of $88,000 for property tax purposes. On August 4, Gregg Repair Service was offered $150,000 for the land by a national retail chain. At what value should the land be recorded in Gregg Repair Service's records?
A) $115,000
B) $88,000
C) $140,000
D) $127,000

Question

Quizplus · Accepted Answer

The land was purchased for $127,000, which is the amount Gregg Repair Service agreed to pay for it. This is the cost basis of the land and should be recorded in the company's records. The fact that it was assessed at a lower value for property tax purposes does not impact the cost basis. Similarly, the offer from the national retail chain is not relevant to the cost basis. Thus, the answer is D, $127,000.

On April 25, Gregg Repair Service Extended an Offer of $115,000