Answer
The amount that should be included in Mickelson Inc.’s balance sheet is \$450,000.This is the historical cost whose reliability is higher than the appraisal value. The gain associated with Mickelson’s land can only be recognized once the land has been sold. The land’s current fair value of \$770,000 cannot be determined reliably.
Work Step by Step
The amount that should be included in Mickelson Inc.’s balance sheet is \$450,000.This is the historical cost whose reliability is higher than the appraisal value. The gain associated with Mickelson’s land can only be recognized once the land has been sold. The land’s current fair value of \$770,000 cannot be determined reliably.