If a Building Is Appraised for $85,000, Offered for Sale

question 119

True/False

If a building is appraised for $85,000, offered for sale at $90,000, and the buyer pays $80,000 cash for it, the buyer would record the building at $85,000.

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Definitions:

Margin of Safety

The difference between actual sales and the break-even point, indicating the level of risk in not covering fixed costs.

Composite Units

A measure used in costing to represent a bundle or mix of goods or services treated as a single unit.

Break-Even Point

The financial state in which total costs equal total revenues, resulting in neither profit nor loss.

Variable Cost

Costs that vary directly with the level of production or volume of services provided.