On January 1, 2014, Fishbone Corporation sold a building that cost $255,100 and

Question

On January 1, 2014, Fishbone Corporation sold a building that cost $255,100 and that had accumulated depreciation of $109,900 on the date of sale. Fishbone received as consideration a $245,000 non-interest-bearing note due on January 1, 2017. 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, 2014, was 8%. 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 reported is:

Explanation / Answer

Book value of asset= 255100-109900= $145200

Sale value= 245000

Hence gain= $99800

Notional interest need not be taken from accounting point of angle as finnacial accounting does not factor time value of money

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