Francisco Sells a Parcel of Land for $100,000 Cash and the Buyer

question 90

Multiple Choice

Francisco sells a parcel of land for $100,000 cash and the buyer also assumes Francisco's liability of $10,000.The basis of his land is $70,000.What is the gain or loss realized on the sale?

• A)$10,000 gain.
• B)$20,000 gain.
• C)$30,000 gain.
• D)$40,000 gain.

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Definitions:

Capital

Capital refers to financial assets or the financial value of assets, such as funds held in deposit accounts, as well as the physical factors of production – namely, machinery, buildings, and land.

Expected Profit Rate

The forecasted rate of return on an investment or business venture, based on estimated earnings.

Gross Domestic Product (GDP)

The complete value, in monetary or market terms, of all the goods and services that are finalized within the territorial boundaries of a country within a particular period.

Investment

Allocating financial assets in hopes of achieving a return or profit.