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27 January, 19:32

A yacht offered for sale is currently assessed at $350K but asked for $450K. The purchaser of the yacht believes that the yacht is worth $375K, but ultimately purchases the yacht for $400K.

The purchaser records the yacht at:

a. $45K

b. $450K

c. $400K

d. $350K

e. $375K

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Answers (1)
  1. 27 January, 20:10
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    c. $400K

    Explanation:

    Given that

    Offered price for sale = $350K

    Asked price = $450K

    Worth of the yacht determined by the purchaser = $375K

    The Purchase value of yacht = $400K

    By considering the historical cost principle, the yacht should be recorded at the purchase price or acquired price or original price i. e $400K in the purchase records so that the reliability of the books could be maintained
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