Dook Show Me How Calcuiator ost Concept n March 31, Higgins Repair Service exten

Question

Dook Show Me How Calcuiator ost Concept n March 31, Higgins Repair Service extended an offer of $415,000 for land that had been priced for sale at $460,000. On April 15, Higgins Repair Service accepted the self ounteroffer of $437,500. On September 9, the land was assessed at a value of $375,000 for property tax purposes. On December 8, Higgins Repair Service was offered 75,000 for the land by national retail chain. t what value should the land be recorded in Higgins Repair Service's records Check My Works more Check Moy Work unes remaring Next 3 more Check My Work uses remaining

Explanation / Answer

Answer : $475000

The valuation done for the Property tax purpose is on the average rotating price of the area, so it is not consideration for booking purpose.

As Higgins Repair Service has been treating the land, which it purchased on counteroffer of $437500, as liquid assets as the “Stock for sale”, so Higgins has to book the land in the books on the recent market value ie. $475000, of which it got the offer on December 8, by booking the unrealised income of $37500. The entry would be :

Date Accounts Titles and description Debit $ Credit $ Dec 8 Stock for sale - Land (revalued) 475000 Stock for sale - Land 437500 Unrealised income on revaluation 37500

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