Question

On February 3, Snap Repair Service extended an offer of $83,000 for land that had been priced for sale at $95,000. On February 28, Snap Repair Service accepted the seller's counteroffer of $90,000. On October 23, the land was assessed at a value of $135,000 for property tax purposes. On January 15 of the next year, Snap Repair Service was offered $144,000 for the land by a national retail chain.At what value should the land be recorded in Snap Repair Service's records

Answer 1

$90,000

Step-by-step explanation:

As per the historical cost principle, the assets should be recognized at the purchase price or the historical cost. In this, no other cost should be recognized such as assessed value, land improvements, etc

Since in the given question the Snap Repair Service accepted the seller counter offer i.e. $90,000 so the same is to be presented in the financial statements

hence, the land should be recorded at $90,000