The BMAC Company purchased land many years ago for $100,000 as a potential site for a new building. No building was ever constructed. A comparable lot near the site was recently sold for $350,000.
Required:
a. At what value should BMAC carry the land on its balance sheet? Support your answer with consideration for the prudence, faithful representation, and relevance of the information that would result.
b. If BMAC wanted to borrow money from a bank, what information about the land would the bank want to know? Explain your answer.
c. What information about the land would potential investors in BMAC want to know? Explain your answer.