Question

In​ 1990, Johnson Company purchased a building for $ 190 comma 000. In​ 2020, a real estate professional says the building has a fair value of $ 1 comma 700 comma 000. In​ 2020, a similar building down the street recently sold for​ $900,000. What​ value, before consideration of accumulated​ depreciation, is reported for the building on the balance sheet at December​ 31, 2020?

Answer 1

$190,000

Step-by-step explanation:

At the time of recording of the fixed assets, the fixed assets should be recorded at purchase cost or historical price as per historical accounting principle.

Since in the question, the building was purchased at $190,000 and its fair value is $1,700,000 and the similar building sold at $900,000

But at the time of recording, the balance sheet would show at the purchase price i.e $190,000