Karen sells vacant land that w
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Karen sells vacant land that was held for investment in her business for $277,000. The land had an adjusted basis of $55,400. The
buyer has offered to pay for the land with $67,000 cash at the date of sale and then in three equal installments of $70,000 over the
next three years beginning on January 1 of the next year. What is Karen's realized and recognized gain in each year of the sale? Assume
that adequate interest is paid in addition to the numbers shown above.
Realized gain
Recognized gain in year 1
Recognized gain in year 2
Recognized gain in year 3
Recognized gain in year 4
$
LA
$
$
tA
LA
$
221,600
13,280
70,000
70,000
70,000
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