Daniel Plc Sells One of Its Properties to a Financing

question 6

Multiple Choice

Daniel Plc sells one of its properties to a financing company with an attached call option,which allows Daniel Plc to reacquire the property at a future date for €400 000.The current market value at the time of the sale is €300 000,but the financing company pays €350 000 for it.It is expected that the market value of the property will exceed €400 000 before the option expires.What is the appropriate treatment of this sale?

• A)Record the revenue and make appropriate note disclosures about the call option and its associated risks.
• B)Set-off the call option and the building-reporting changes in the difference between their current values as revenues or expenses as appropriate.
• C)No entry would be required as the call option is off balance sheet and the building has not effectively been sold.
• D)Record the inflow of cash and a liability.

---

Definitions:

Integrated Marketing Communication (IMC) Strategy

A holistic approach in marketing that aims to ensure consistency of message and the complementary use of media to reinforce the customer's brand experience.

Well-Defined Purpose

Refers to a clear, specific, and explicit goal or objective that guides an action, project, or strategy.

Personal Selling

A form of direct marketing where sales representatives personally interact with potential customers to inform about and sell their products or services.

Print

Refers to written or graphic material that has been reproduced on paper or other substrates through printing processes, such as books, magazines, and posters.