On June 15, 2015, Roco Sold Land Held for Investment

question 5

Short Answer

On June 15, 2015, Roco sold land held for investment to Scotty for $100,000 cash and an installment note of $500,000 payable in five equal annual installments beginning on June 15, 2016, plus interest at 10%. Roco's basis in the land is $300,000. What amount of gain is recognized in 2015 under the installment method?

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Definitions:

Work In Process

Refers to the materials, labor, and overhead costs that are in the process of being converted into finished products in manufacturing.

Equivalent Unit

A concept used in cost accounting to represent a partially finished unit of product, allowing the calculation of the cost per unit during various stages of production.

Equivalent Units

A measure used in cost accounting to express the amount of materials, labor, or overhead a partially completed unit represents in terms of fully completed units.

Operations

Activities and tasks involved in the day-to-day running of a business for the purpose of producing value for the stakeholders.