in 1990, johnson company purchased a building for $200,000. in 2022, a real estate professional says the…

in 1990, johnson company purchased a building for $200,000. in 2022, a real estate professional says the building has a fair value of $1,200,000. in 2022, a similar building down the street recently sold for $900,000. what value, before consideration of accumulated depreciation, is reported for the building on the balance sheet at december 31, 2022?\n\na. $200,000\nb. $1,200,000\nc. $700,000\nd. $900,000

in 1990, johnson company purchased a building for $200,000. in 2022, a real estate professional says the building has a fair value of $1,200,000. in 2022, a similar building down the street recently sold for $900,000. what value, before consideration of accumulated depreciation, is reported for the building on the balance sheet at december 31, 2022?\n\na. $200,000\nb. $1,200,000\nc. $700,000\nd. $900,000

Answer

Explanation:

Step1: Recall accounting principle

In accounting, long - term assets like buildings are generally recorded at historical cost (the amount paid to acquire them) on the balance sheet, unless there are specific revaluation rules applied (which are not indicated here).

Step2: Identify historical cost

The Johnson Company purchased the building for $200,000 in 1990. This historical cost is the value to be reported on the balance sheet before considering accumulated depreciation.

Answer:

A. $200,000