Question

Jason Thompson purchase an office building 10 years ago for $780,000. The building was just appraisal $1.25 million. What value should be used for the building in Jason's accounting records?

Answer 1

No adjustment in records can be made until the asset is sold.

Step-by-step explanation:

This is an example of cost concept. Assets are generally recorded at cost and remain on the accounting records at cost until they are disposed of. Future economic condition may change this appraised value, and therefore no adjustment in records can be made until the asset is sold.