At what amount should the following assets be recorded on the financial statemen
ID: 2455518 • Letter: A
Question
At what amount should the following assets be recorded on the financial statements as the year end 20X2? Justify your answers. A) A corn planter with a list price of $212,000 was acquired for a cash payment of $199,500. B) Mike's Farms built a barn for $212,000. Once complete, three independent appraisers agreed that the fair value of the structure was $208,000. C) A special, limited edition Classic GTO with a list price of $85,000 that is acquired in exchange for 1,000 shares of common stock. The stock had a market value of $83 per share at the time of the exchange. D) Nation Bank built a branch office for $2,1000,000. Following completion, two independent appraisers agreed that the fair value of the structure was $2,125,000.
Explanation / Answer
A. $199500. As the list price is not the cost incurred for acquiring the product.
B. $212000. The historical cost of construction will be recoded as per GAAP.
C. $83000. The Market price of 1000 shares of common stock of the company will be recorded as the fair value of the asset aquired. As the list price is not the actual cost incurred for acquiring the asset. And fair market value is the most appropriate basis.
D. $21000000. The historical cost of construction will be recoded as per GAAP.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.