A building is offered for sale at 500000 but is currently as

A building is offered for sale at $500,000 but is currently assessed at $400000. The purchaser of the building believes that building is worth $475,000 but ultimately purchases the building for $450000. What price will purchaser record the building at?

Solution

A building is offered for sale at $500,000

currently assessed = $400000.

Purchaser of the building believes that building is worth $475,000 but ultimately purchases the building for $450000.

Now the issue is what Price of Building is need to be recorded :-

Under Generally Accepted Accounting Principles, The Purchaser would record the building for the actual amount paid by him

Hence the amount recorded = $ 450000

i.e $ 450000

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