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Complete Exercises E9-1, E9-7, & E9-12 and P9-7B

E9-1

(A). 

The cost principle states that assets must be recorded at the cost at which they were acquired. Although plant assets can fluctuate in fair market value, their book value will remain consistent. Companies must compute the total deprecation of the asset and allocate it over the useful life of the asset.

(B).

1)$5000-Land

2) $200- Equipment

3) $850-Equipment