Question

cost concept
on february 3, boulder repair service extended an offer of $566,000 for land that had been priced for sale at $629,000. on february 28, boulder repair service accepted the sellers counteroffer of $597,000. on october 23, the land was assessed at a value of $613,000 for property tax purposes. on january 15 of the next year, boulder repair service was offered $708,000 for the land by a national retail chain.
at what value should the land be recorded in boulder repair service’s records?
$

Explanation:

Step1: Identify relevant accounting rule

The cost concept (historical cost principle) requires assets to be recorded at the actual amount paid to acquire them.

Step2: Locate the acquisition cost

Boulder Repair Service accepted the seller's counteroffer of $597,000, which is the actual amount paid to acquire the land. Other values (initial offer, asking price, assessed value, later offer) do not apply to the initial recording.

Answer:

$597,000