Use the Following Information for Questions

question 28

Multiple Choice

Use the following information for questions:
A corporation sold a tract of land for $525,000 that had originally cost $350,000.The buyer will make three annual payments of: $250,000; $125,000; and $150,000.Ignore interest and use the instalment method.
-The unrecognized profit at the end of year two amounts to:

• A)$0
• B)$50,000
• C)$91,667
• D)$175,000

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Definitions:

Debt-to-Equity Ratio

A measure showing the balance of debt versus shareholders' equity employed in the procurement of company assets.

Financed

The process of providing or securing funds for business activities, purchases, or investments.

Investor and Creditor Risk

The level of uncertainty faced by investors and creditors due to the possibility of a company failing to meet its financial obligations.