ER Received a Building as a Donation at No Cost

ER received a building as a donation at no cost, except for transfer costs and some ordinary repair costs. The company agreed to start operations within one year with an expected payroll for 1,000 employees. The preferred financial accounting at the transfer date is for ER to:

A) record the building at its current market value plus transfer costs and repair costs.
B) record the building at its current market value less transfer and repair costs.
C) make only a memorandum entry (i.e. no journal entry) to reflect that there was no acquisition cost.
D) record the building at the sum of transfer costs and repair costs.
E) record the building at market value plus transfer costs.

Correct Answer:

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