Chapter 1, Problem 6Q

To determine

Application of Cost Principle

The cost principle is one of the basic guidelines in accounting. According to this principle, assets are to be reported at the original cash amount at which it was purchased. For example, a piece of land purchased for $70,000 would be appraised at a higher value considering the rise of prices in the housing market. However, the value of land should be reported at $70,000.

The amount to be reported for land on H’s balance sheet as on December 31, 2019.