During 2009, URBAN Company sold 10 acres of prime commercial zoned land to a builder for $5,000,000. The builder gave URBAN a $1,000,000 down payment and will pay the remaining balance of $4,000,000 to URBAN in 2010. URBAN purchased the land in 2002 for $2,000,000. Using the installment method, how much profit will URBAN report for 2009?
During 2009, URBAN Company sold 10 acres of prime commercial zoned land to a builder for $5,000,000. The builder gave URBAN a $1,000,000 down payment and will pay the remaining balance of $4,000,000 to URBAN in 2010. URBAN purchased the land in 2002 for $2,000,000. Using the installment method, how much profit will URBAN report for 2009?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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![During 2009, URBAN Company
sold 10 acres of prime commercial
zoned land to a builder for
$5,000,000. The builder gave
URBAN a $1,000,000 down
payment and will pay the remaining
balance of $4,000,000 to URBAN in
2010. URBAN purchased the land
in 2002 for $2,000,000. Using the
installment method, how much
profit will URBAN report for 2009?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9ded9a53-4dc5-467d-a49d-c1040dcde29f%2Faac1962e-150a-4033-a051-fec9a96ffd3c%2Fwq48yg3_processed.jpeg&w=3840&q=75)
Transcribed Image Text:During 2009, URBAN Company
sold 10 acres of prime commercial
zoned land to a builder for
$5,000,000. The builder gave
URBAN a $1,000,000 down
payment and will pay the remaining
balance of $4,000,000 to URBAN in
2010. URBAN purchased the land
in 2002 for $2,000,000. Using the
installment method, how much
profit will URBAN report for 2009?
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