Question

Two years ago, Delta Company sold an asset on an installment basis. Delta had $250,000 of realized gain on the sale and has recognized $75,000 of such gain over the past two years. This year, Delta sold the installment receivable to a finance company in exchange for cash. How much gain must Delta recognize on the sale of the note

Answer 1

$175,000

Step-by-step explanation:

Calculation for How much gain must Delta recognize on the sale of the note

Using this formula

Gain recognized=Realized gain on the sale-Gain recognized over the past two year

Let plug in the formula

Gain recognized=$250,000-$75,000

Gain recognized=$175,000

Therefore How much gain must Delta recognize on the sale of the note will be $175,000