On July 1, 2018, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000.The book value of the land on Apache’s books was $1,200,000. Terms of the sale required a down payment of$150,000 and 19 annual payments of $150,000 plus interest at an appropriate interest rate due on each July 1beginning in 2019. Apache has no significant obligations to perform services after the sale. How much grossprofit will Apache recognize in both 2018 and 2019 applying the installment sales method?
On July 1, 2018, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000.The book value of the land on Apache’s books was $1,200,000. Terms of the sale required a down payment of$150,000 and 19 annual payments of $150,000 plus interest at an appropriate interest rate due on each July 1beginning in 2019. Apache has no significant obligations to perform services after the sale. How much grossprofit will Apache recognize in both 2018 and 2019 applying the installment sales method?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1, 2018, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000.
The book value of the land on Apache’s books was $1,200,000. Terms of the sale required a down payment of
$150,000 and 19 annual payments of $150,000 plus interest at an appropriate interest rate due on each July 1
beginning in 2019. Apache has no significant obligations to perform services after the sale. How much gross
profit will Apache recognize in both 2018 and 2019 applying the installment sales method?
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