Year 0 1 2 Recognized Gain
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![**Required Information**
*[The following information applies to the questions displayed below.]*
Russell Corporation sold a parcel of land valued at $400,000. Its basis in the land was $275,000. For the land, Russell received $50,000 in cash in year 0 and a note providing that Russell will receive $175,000 in year 1 and $175,000 in year 2 from the buyer. *(Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)*
**Question:**
What is Russell’s recognized gain in year 0, year 1, and year 2?
**Table:**
| Year | Recognized Gain |
|------|-----------------|
| 0 | |
| 1 | |
| 2 | |
---
This table is used to fill in the recognized gain for Russell in each of the specified years (year 0, year 1, and year 2) based on the information given above.
To calculate the recognized gain each year, you will need to:
1. **Year 0:**
- Calculate the gain realized on the sale by subtracting the basis ($275,000) from the selling price ($400,000).
- Allocate the gain proportionally based on the payments received.
2. **Year 1 and Year 2:**
- Recognize gain in proportion to the payments received in these years.
Remember to round your final answers to the nearest whole dollar as instructed.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F87f377c8-556b-40c3-ad73-583aac17d9d0%2F1e7ca802-7b4c-475b-94bf-699b70a408b8%2Fjmqetja_processed.png&w=3840&q=75)
Transcribed Image Text:**Required Information**
*[The following information applies to the questions displayed below.]*
Russell Corporation sold a parcel of land valued at $400,000. Its basis in the land was $275,000. For the land, Russell received $50,000 in cash in year 0 and a note providing that Russell will receive $175,000 in year 1 and $175,000 in year 2 from the buyer. *(Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)*
**Question:**
What is Russell’s recognized gain in year 0, year 1, and year 2?
**Table:**
| Year | Recognized Gain |
|------|-----------------|
| 0 | |
| 1 | |
| 2 | |
---
This table is used to fill in the recognized gain for Russell in each of the specified years (year 0, year 1, and year 2) based on the information given above.
To calculate the recognized gain each year, you will need to:
1. **Year 0:**
- Calculate the gain realized on the sale by subtracting the basis ($275,000) from the selling price ($400,000).
- Allocate the gain proportionally based on the payments received.
2. **Year 1 and Year 2:**
- Recognize gain in proportion to the payments received in these years.
Remember to round your final answers to the nearest whole dollar as instructed.
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