Final answer:
The Duce Company should record and report its plants as assets at the original purchase cost of $100 million, according to Generally Accepted Accounting Principles, despite the current fair value being $500 million.
Step-by-step explanation:
The student has asked about how the Duce Company should record and report the value of its plants as assets. When discussing the valuation of assets on a balance sheet, it is important to consider the accounting principles that the company follows.
Generally Accepted Accounting Principles (GAAP) require that assets be recorded at their historical costs rather than their current fair value.
Hence, although the current fair value of the plants is $500 million, they should be recorded at the original cost of acquisition, which is $100 million.
The complete question is: The Duce Company has five plants nationwide that cost a total of $100 million. The current fair value of the plants is $500 million. The plants will be recorded and reported as assets at is: