Georgetown Ltd purchased a block of land on 31 March and paid $400 000 cash to the land owner. An independent evaluation reveals that the land is worth $500 000. Using historical cost as a measurement base, how should Georgetown Ltd recognise this purchase of land in its financial statements?

A) $400 000 recognised as an asset (land) and $100 000 as a liability.
B) $400 000 recognised as an asset (land) .
C) $500 000 recognised as an asset (land) .
D) The land should not be recognised as an asset as it cannot be reliably measured.

Under the historical cost measurement base, the cost of the asset is recognised as its initial acquisition cost, which in this case is $400,000. The fact that the land is currently worth $500,000 is not relevant under this measurement base. Therefore, the land should be recognised as an asset (land) with a value of $400,000. There is no liability associated with the purchase of land, so choice A is incorrect. Choice C is incorrect because it does not take into account the historical cost measurement base. Choice D is incorrect because the land can be reliably measured - its cost is $400,000.