Question

Thomas Company has decided to purchase a company vehicle. The accountant was given all of purchase details. Which should be used to record the vehicle in the accounting records? The price negotiated with the dealer. The manufacturer’s suggested retail price (MSRP). The amount of the loan with the bank. The average selling price of similar vehicles in the area.

Answer 1

The price negotiated with the dealer.

Step-by-step explanation:

Since in the question it is mentioned that the Thomas company decided to purchase a company vehicle. And the accountant provided all the purchase details.

So for recording the vehicle in the accounting records the price negotiated with the dealer is used as in the accounting, only numbers are recorded which are based on the type of the transactions.

The purchase details includes color of a vehicle, price, mileage, capacity, etc

Therefore for accounting purpose, we only considered the price and the same is to be considered.