Question

On July 1, 2018, Apache Company, a real estate developer, sold a parcel of land to a construction company for $4,128,000. The book value of the land on Apache’s books was $1,720,000. Terms of the sale required a down payment of $172,000 and 23 annual payments of $172,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2019. How much revenue will Apache recognize for the sale (ignoring interest), assuming that it recognizes revenue at the point in time at which it transfers the land to the construction company? (Leave no cells blank - be certain to enter "0" wherever required.)

Answer 1

the complete gross profit on sale: 2,408,000

over the next year it will recognize interest revenue not sales revenues.

Step-by-step explanation:

If it recognzie revenues at delivery point (transfer of ownership then It will recognize the entire revenue in the first year and none in the subsequent year

4,128,000 - 1,720,000 = 2,408,000 revenue on 2019

the following year, will recognize interest reveneu but none sales revenues