On January 1, 2017, Bonita Corporation sold a building that cost $252,360 and that had accumulated...
On January 1, 2017, Bonita Corporation sold a building that cost $252,360 and that had accumulated depreciation of $103,650 on the date of sale. Bonita received as consideration a $242,360 non-interest-bearing note due on January 1, 2020. There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type on January 1, 2017, was 9%. At what amount should the gain from the sale of the building be reported? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)
The amount of gain should be reported:
Homework Answers
The book value of building = $252,360 - $103,650 = $148,710
Note due in 3 year, PV = $242,360 x 3DF9% = $242,360 x 0.77218 = $187,146
Gain on sale of building = $38,436
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