Listed below are several statements that relate to financial accounting and reporting. Identify the accounting concept that applies to each statement.4. Crosby Company lists land on its balance sheet at $120,000, its original purchase price, even though the landhas a current fair value of $200,000.

Listed below are several statements that relate to financial accounting and reporting. Identify the accounting concept that applies to each statement.4. Crosby Company lists land on its balance sheet at $120,000, its original purchase price, even though the landhas a current fair value of $200,000.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter2: Basic Accounting Systems: Cash Basis

Section: Chapter Questions

Problem 6CDQ: Capstone Consulting Services acquired land 5 years ago for $200,000. Capstone recently signed an...

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Listed below are several statements that relate to financial accounting and reporting. Identify the accounting concept that applies to each statement.
4. Crosby Company lists land on its balance sheet at $120,000, its original purchase price, even though the land
has a current fair value of $200,000.

Process of recording, summarizing, and analyzing financial information to prepare financial statements, and making them available to stakeholders, thereby enabling them to make an informed decision about the company. Financial reporting is an extension of financial accounting that deals with the presentation of financial information in accordance with the requirements of prescribed accounting standards.

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Capstone Consulting Services acquired land 5 years ago for $200,000. Capstone recently signed an agreement to sell the land for $375,000. In accordance with the sales agreenwnt, the buyer transferred $375,000 to Capstone’s bank account on February 20. How would elements of the accounting equation be affected by the sale?
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