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Land $614,400
Building $345,600
Recording the land in the accounting records would
a. increase land by $588,800.
b. increase land by $614,400.
c. increase assets by $920,000.
d. Both a and c.
Option B. . increase land by $614,400.
Correct answer is b. increase land by $614,400.
Option
"D" is correct answer.
Because we make capitalization on the basis that -- Cost Price & Market Value, whichever is lower.
as per international accounting standard we booked all expected loss but not all expected profit.
Option B increase land by $614,400. is the answer
This would a. increase land by $588,800 and building by331,200. This is based on the proportion of the market values of the two. This transaction would not increase asset by $920,000 because I assumed that the said purchase is paid in cash. What will happened is an increase in asset by $920,000 and a decrease of $920,000 in asset.
Since the land has no depreciation, it had been recorded separately from Building at the time of purchase. Therefore the appreciation in assets will be recorded in the same way.
The land will be increased by $614,400/- (option b), and that revaluation will go to the Revaluation Reserve under the Equity.
Common plant assets are buildings, machines, tools, and office equipment When a company acquires a plant asset accountants record the asset at the cost and the best measure of an asset fair market value at the time of purchase. The cost of land includes its purchase price and other many other costs including.
