Question

equipment with an estimated market value of 45,000 is offered for sale at 65,000 the equipment Is acquired for 50,000 in cash. The amount used in the buyers accounting records to record this acquisition is:

Answer 1

The acquisition of equipment for $50,000 in cash is recorded at this transaction price in the buyer's accounting records, following the historical cost principle.

Step-by-step explanation:

The amount used in the buyer's accounting records to record the acquisition of equipment is $50,000, which is the cash amount paid for the equipment. In accounting, when an asset is purchased, the historical cost principle dictates that the asset is recorded in the buyer's books at the acquisition cost, not the market value or the selling price.

The market value of the equipment was $45,000, and although it was offered for sale at $65,000, the actual transaction occurred at $50,000. This transaction price is what is considered for accounting purposes, regardless of the initial asking price or the estimated market value. The historical cost will appear as an asset on the balance sheet and will be subject to depreciation over its useful life, in accordance with the company's accounting policies.

This transaction does not take into account the estimated market value or the offered sale price. The amount recorded in the buyer's accounting records is based solely on the cash paid for the acquisition.