If a parcel of land that was originally acquired for $85,000 is offered for sale at $150,000, is assessed for tax purposes at $95,000, is recognized by its purchasers as easily being worth $140,000, and is sold for $137,000, the land should be recorded in the purchaser's books at:
A) $95,000.
B) $137,000.
C) $138,500.
D) $140,000.
E) $150,000.

Question

Quizplus · Accepted Answer

Under generally accepted accounting principles (GAAP), assets should be recorded at their acquisition cost. In this case, the land was acquired for $137,000, which is the price paid by the purchaser. Therefore, it should be recorded at this amount in the purchaser's books.

If a Parcel of Land That Was Originally Acquired for $85,000