Question

Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $91,783. The Focus Company initially offered to buy the land for $108,128. The companies settled on a purchase price of $212,000. On the same day, another piece of land on the same block sold for $103,023. Under the cost principle, at what amount should the land be recorded in the accounting records of Focus Company

Answer 1

$212,000

Step-by-step explanation:

Based on the information given we were told that the companies settled on a PURCHASE PRICE of the amount of $212,000 which therefore means that UNDER THE COST PRINCIPLE, the amount that the land should be recorded in the accounting records of Focus Company will be $212,000 which is the PURCHASE PRICE.