Reference no: EM133110856

Question - 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.