On july 1 2016 apache company a real estate developer sold

Reference no: EM13587775

On July 1, 2016, Apache Company, a real estate developer, sold a parcel of land to a construction company for $3,000,000. The book value of the land on Apache's books was $1,200,000. Terms of the sale required a down payment of $150,000 and 19 annual payments of $150,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2017. How much revenue will Apache recognize for the sale (ignoring interest), assuming that it recognizes revenue at the point in time at which it transfers the land to the construction company?

I believe that the journal entry for this problem looks like this:

Accts. Rec.	2,850,000
Deferred Revenue		2,850,000

Cash	150,000
Revenue		150,000

Which means that the amount of revenue recognized in 2016 is $150,000. Does the book value of the land play a part in this problem?

Reference no: EM13587775

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