The Restor-It Is a Company Specializing in the Restoration of Old

question 25

Essay

The Restor-It is a company specializing in the restoration of old homes. To showcase its work, the company purchased an old Victorian home in downtown Pittsburg, Kansas. The original home was purchased for $125,000. A new heating and air-conditioning system was added for $30,000. The house was completely rewired and re-plumbed at a cost of $50,000. Custom cabinets were added, and the floors and trim were refurbished to their original condition, at a cost of $75,000.
The project was such a success, that Restor-It decided to purchase another very large home, this time in nearby Joplin, Missouri. A realtor offered to purchase the home in Pittsburg for $175,000. He plans to lease it as luxury short-term apartments for visiting dignitaries. Restor-It decided that a modest return was all that was required, and so they agreed to sell. Only afterward did they learn that they had a $10,000 loss on the sale. The president of the company, Dan Carlin, does not believe that a loss is possible. "We sold that house for more than we paid for it," he said. "I know we put some money in it, but we had depreciated it for three years. How in the world can we have a loss?"
Required:
Write a short memo to Mr. Carlin explaining how it would be possible to have a loss. Do not try to use specific numbers for cost or depreciation.

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Definitions:

Follow-Up Appointment

A scheduled meeting with a healthcare provider after a previous visit or procedure to assess progress or manage ongoing treatment.

Occupational Therapist

A healthcare professional specializing in helping individuals develop, recover, or maintain daily living and work skills.

Capitation

A payment arrangement in healthcare where providers receive a set amount per patient regardless of the number of services provided.

Rheumatologist

A medical doctor specializing in diagnosing and treating rheumatic diseases, which affect the joints, muscles, and bones.