The Superior Company acquired a building for $500,000.The building was appraised at a value of $575,000.The seller had paid $300,000 for the building 6 years ago.Which accounting principle would require Superior to record the building on its records at $500,000?

A) Monetary unit assumption.
B) Going-concern assumption.
C) Measurement (Cost) principle.
D) Business entity assumption.
E) Revenue recognition principle.

Question

Itzel Santos · Accepted Answer

Final Answer : C, Explanation :  The measurement (cost) principle requires that assets be recorded on the company's records at their historical cost. In this case, the cost of the building to Superior is $500,000, which is the price they paid for it. Even though the building may have a higher appraisal value or the seller may have paid less for it in the past, the cost principle dictates that Superior record the building on their books at the amount they paid for it.

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