Question

Peyton sells an office building and the associated land on May 1 of the current year. Under the terms of the sales contract, Peyton is to receive $1,950,800 in cash. The purchaser is to assume Peyton's mortgage of $1,170,480 on the property. To enable the purchaser to obtain adequate financing, Peyton is to pay the $23,410 in points charged by the lender. The broker's commission on the sale is $78,032. What is Peyton's amount realized

Answer 1

Answer: $‭3,019,838‬

Step-by-step explanation:

Peyton will gain the cash from this transaction.

Peyton will also gain the mortgage that is assumed by the buyer because they are being freed from debt.

They will however incur the expense of the broker's commission and the points they have to pay for.

Amount Peyton will recognize:

= Cash received from sale + Peyton mortgage assumed by Buyer - Points Peyton pays for - Broker's commission

= 1,950,800 + 1,170,480 - 23,410 - 78,032

= $‭3,019,838‬