In 1998, Parker Corporation purchased land for $130,000. In 2010, Parker Company had the land appraised, and its value was estimated to be $190,000. Also during 2010, another company offered Parker $145,000 for the parcel of land. When the balance sheet is prepared at the end of 2010, at what dollar amount should the land be reported?

Question

Gretchen Raymond

Business

14 March, 05:45

In 1998, Parker Corporation purchased land for $130,000. In 2010, Parker Company had the land appraised, and its value was estimated to be $190,000. Also during 2010, another company offered Parker $145,000 for the parcel of land. When the balance sheet is prepared at the end of 2010, at what dollar amount should the land be reported?

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Answers (1)

Know the Answer?

Lia Ewing · Answer 1

The land should be reported at $130,000

Explanation:

In this question, we have to apply one of the Generally Accepted Accounting Principle (GAAP), i. e. Historical cost principle.

Historical Cost Principle: According to this principle, the value of fixed assets should be recorded at the purchase price or book value.

So, in the given case, the land should be reported at $130,000 irrespective of whatever amount is given in the question