D is corrent. The gain (loss) is the difference between the value of the consideration received and the book value of the building sold. The consideration received is a 3-year, noninterest-bearing, $400,000 note. Per ASC Topic 835, such receivable is to be recorded at its present value.| PV of note | $400,000 | × | .71 | = | $ 284,000 | | Book value | $380,000 | – | $160,000 | = | $ 220,000 | | Gain | $284,000 | – | $220,000 | = | $ 64,000 |
The entry to record this transaction is as follows:| Note receivable | 400,000 | | | Accum. depr. | 160,000 | | | | 116,000 | | | 380,000 | | | 64,000 |
A is incorrect. The gain (loss) is the difference between the value of the consideration received and the book value of the building sold. The consideration received is a 3-year, noninterest-bearing, $400,000 note. Per ASC Topic 835, such receivable is to be recorded at its present value.| PV of note | $400,000 | × | .71 | = | $ 284,000 | | Book value | $380,000 | – | $160,000 | = | $ 220,000 | | Gain | $284,000 | – | $220,000 | = | $ 64,000 |
The entry to record this transaction is as follows:| Note receivable | 400,000 | | | Accum. depr. | 160,000 | | | | 116,000 | | | 380,000 | | | 64,000 |
B is incorrect. The gain (loss) is the difference between the value of the consideration received and the book value of the building sold. The consideration received is a 3-year, noninterest-bearing, $400,000 note. Per ASC Topic 835, such receivable is to be recorded at its present value.| PV of note | $400,000 | × | .71 | = | $ 284,000 | | Book value | $380,000 | – | $160,000 | = | $ 220,000 | | Gain | $284,000 | – | $220,000 | = | $ 64,000 |
The entry to record this transaction is as follows:| Note receivable | 400,000 | | | Accum. depr. | 160,000 | | | | 116,000 | | | 380,000 | | | 64,000 |
C is incorrect. The gain (loss) is the difference between the value of the consideration received and the book value of the building sold. The consideration received is a 3-year, noninterest-bearing, $400,000 note. Per ASC Topic 835, such receivable is to be recorded at its present value.| PV of note | $400,000 | × | .71 | = | $ 284,000 | | Book value | $380,000 | – | $160,000 | = | $ 220,000 | | Gain | $284,000 | – | $220,000 | = | $ 64,000 |
The entry to record this transaction is as follows:| Note receivable | 400,000 | | | Accum. depr. | 160,000 | | | | 116,000 | | | 380,000 | | | 64,000 |
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