What was the farm's net worth on January 1, 2010 using cost values for assets?

What was the farm's net worth on January 1, 2010 using cost values for assets?

• A. 1,123,385
• B. 1,223,385
• C. 1,033,385
• D. 2,123,385

Answer: (A)

Net worth, or owner’s equity, is what remains for the owners after all debts are paid. It’s calculated by valuing assets at their cost (not their current market value) and then subtracting liabilities. In this context, you list every asset at its cost value, sum them up, subtract all liabilities as of January 1, 2010, and the result is the farm’s net worth under the cost-valuation convention. The correct option matches that computed equity exactly when assets are recorded at cost and liabilities are subtracted, giving 1,123,385. Using cost values keeps the measurement conservative and consistent with the stated method, so this figure is the appropriate net worth for that date.

Net worth, or owner’s equity, is what remains for the owners after all debts are paid. It’s calculated by valuing assets at their cost (not their current market value) and then subtracting liabilities. In this context, you list every asset at its cost value, sum them up, subtract all liabilities as of January 1, 2010, and the result is the farm’s net worth under the cost-valuation convention.

The correct option matches that computed equity exactly when assets are recorded at cost and liabilities are subtracted, giving 1,123,385. Using cost values keeps the measurement conservative and consistent with the stated method, so this figure is the appropriate net worth for that date.