Horan Industries purchased a parcel of land next to their existing plant for $700,000, in order to expand operations. The seller was reluctant to sell initially so to persuade them, Horan offered a price that was twice the market value of the land. According to the historic cost concept, how should the purchase be recorded on the balance sheet?

• It should be reported at the purchase price of $700,000
• It should be reported at its fair market value of $350,000
• It should be reported at the value provided by an independent appraiser
• It should be reported at $700,000 and immediately report a loss of $350,000