On July 1, 2016, Apache Company, a real estate developer, sold a parcel of land
ID: 2509727 • Letter: O
Question
On July 1, 2016, Apache Company, a real estate developer, sold a parcel of land to a construction company for $2,880,000. The book value of the land on Apache’s books was $1,280,000. Terms of the sale required a down payment of $320,000 and 8 annual payments of $320,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2017.
How much revenue will Apache recognize for the sale (ignoring interest), assuming that it recognizes revenue at the point in time at which it transfers the land to the construction company?
On July 1, 2016, Apache Company, a real estate developer, sold a parcel of land to a construction company for $2,880,000. The book value of the land on Apache’s books was $1,280,000. Terms of the sale required a down payment of $320,000 and 8 annual payments of $320,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2017.
Explanation / Answer
The total revenue will be recognized in 2016 as as in 2016 Apache has transferred the land Revenue: 2016 2880000 2017 0
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