Question

On July 25 of this year, Taylor sold land with a cost of $15,000 for $40,000. Taylor collected $20,000 this year and is scheduled to receive $5,000 each year for four years starting next year plus an acceptable rate of interest. Taylor's gain recognized this year is:________

Answer 1

$12,500

Step-by-step explanation:

In this question, first, we have to determine the gain on sale of land then we have to do proportionately which is shown below:

Gain on sale of the asset

= Sale price of land - the cost of land

= $40,000 - $15,000

= $25,000

Now the proportionate amount would be

= Gain × collected amount this year ÷ sale price

= $25,000 × $20,000 ÷ $40,000

= $12,500

All other information which is given is not relevant. Hence, ignored it