Question

A company purchased property for $300,000. The property included an acre of land valued at $50,000, a building valued at $150,000, and equipment valued at $125,000. The equipment will be recorded at a cost of:________

a. $125,000.
b. $120,000.
c. $118,723.
d. $115,384.

Answer 1

The equipment will be recorded at the cost it was valued at the time of purchase, which is $125,000, making option a the correct answer.

Step-by-step explanation:

The cost at which the equipment will be recorded in the company's financial statements is the value at which the equipment was valued at the time of purchase, regardless of the total purchase price of the property. As the equipment was valued at $125,000, this is the cost at which it will be recorded, making option a ($125,000) the correct answer. The three main types of financial statements are the balance sheet, the income statement, and the cash flow statement. These three statements together show the assets and liabilities of a business, its revenues and costs, as well as its cash flows from operating, investing, and financing activities.