Belle Company buys land for $50,000 on 12/31/20. As of 3/31/21, the land has appreciated in value to $50,700. On 12/31/21, the land has an appraised value of $51,800. By what amount should the Land account be increased in 2021

Belle Company

The amount that the Land account should be increased by is:

= $1,800.

Explanation:

a) Data and Calculations:

Cost of land bought on 12/31/20 = $50,000

Value of land on 3/31/21 = $50,700

Appraised value of land on 21/31/21 = $51,800

The amount that the Land account should be increased by is $1,800 ($51,800 - $50,000)

b) Land is always appraised by a professional appraiser who uses the value of similar property in the same location to determine the value.  Appraisal helps to determine the value of the property, especially if it is being sold to another party or being used as collateral to obtain finance.

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