Question

Kelli Company acquired land by assuming a mortgage for the full acquisition cost. How should this acquisition be recorded on the balance sheet?

a) Land should be recorded at the fair market value
b) Land should be recorded at the mortgage amount
c) Land should not be recorded on the balance sheet
d) Land should be recorded at the appraised value

Answer 1

Land acquired by assuming a mortgage for the full acquisition cost should be recorded on the balance sheet at the mortgage amount.

Step-by-step explanation:

The acquisition of land by assuming a mortgage for the full acquisition cost should be recorded on the balance sheet at the mortgage amount. This means that the land should be recorded at the value of the mortgage, not its fair market value or appraised value.