Question

Question ObjectivesTest side bar expand button Q 3.2: According to the historical cost principle, if an asset costs $50,000 when it was purchased, it would be recorded at its ________ over the time the asset is held. A : cost B : fair value C : appreciated value D : market value

Answer 1

A.

Step-by-step explanation:

The cost principle means that in accounting, any transaction is recorded at the historical purchase price.

A fair value is the amount at which an asset could be exchanged in an arm´s length transaction between knowledgeable and willing parties.

Revaluation of fixed assets is not allowed for GAAP.

An appreciated value is an increase in the value of an asset over time.

A market value is the price at which a product or service could be sold in a competitive, open market.