On 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 seller’s counteroffer 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 $475,000 for the land by a national retail chain. At what value should the land be recorded in Higgins Repair Service’s records?
Answer:
$437,500. Under the cost concept, the land should be recorded at the cost to Higgins Repair Service.