Final answer:
Zack's Inc. would recognize a $15,000 realized loss from the sale of land that cost $85,000 and was sold for $70,000. This loss impacts the net income on the income statement and affects the company's assets on the balance sheet.
Step-by-step explanation:
Zack's Inc. sold land that cost $85,000 for $70,000 cash. As a result of this transaction, Zack's Inc. would recognize a loss on the sale of land. Since the land was sold for less than its original cost, this is considered a realized loss in accounting terms, specifically affecting the company's financial statements. The loss would be calculated as the difference between the selling price and the cost of the land.
The realized loss for Zack's Inc. would be $15,000 ($85,000 original cost - $70,000 selling price). This loss would reduce Zack's Inc.'s net income for the period in which the sale occurred and would be reflected in the income statement. Moreover, the transaction would lead to a decrease in the company's assets, specifically under the 'land' account within the balance sheet, and an increase in the cash or cash equivalents by the amount the land was sold for.