(a) On January 1, 2012, Fishbone Corporation sold a building that cost $264,900
ID: 2372696 • Letter: #
Question
(a) On January 1, 2012, Fishbone Corporation sold a building that cost $264,900 and that had accumulated depreciation of $106,100 on the date of sale. Fishbone received as consideration a $254,100 non-interest-bearing note due on January 1, 2015. 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, 2012, was 8%. At what amount should the gain from the sale of the building be reported? (Round answers to 0 decimal places, e.g. $458,581.)
$
Explanation / Answer
Value of building that cost $264,900 after just after selling=$158 800;
Interest rate=8%;
Worth after 3 yrs=$ 200 042.3 ;
Total Gain = $ 54 557.7;
Gain/yr= $18 186
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