Eton Corporation purchased land in 1990 for $190,000. In 2008, it purchased a nearly identical parcel of land for $430,000. In its 2008 balance sheet, Eton valued these two parcels of land at a combined value of $860,000. Reporting the land in this manner violated the:

Question

Quizplus · Accepted Answer

The cost principle states that assets should be recorded at their historical cost, and not the current market value. So, by valuing the two parcels of land at a combined value of $860,000, which is the total market value of the land, Eton has violated the cost principle.

Eton Corporation Purchased Land in 1990 for $190,000