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Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $220,000. Focus Company initially offered to buy the land for $177,000. The companies settled on a purchase price of $212,000. On the same day, another piece of land on the same block sold for $232,000. Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Company?

Respuesta :

eugeniawatanabe

Answer:

$ 212,000

Explanation:

According to the cost concept all acquisition of an asset should be recorded at the cost in which it was purchased and will continue to appear in the books at that figure irrespective of its market value.

Therefore the land should be recorded in the accounting records of Focus Company at its purchase value ($ 212,000).

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