Maple Corporation sells farm machinery on the installment plan. On July 1, 2014, it entered into an installment sale contract with Agriculture, Inc., for an eight-year period. Equal annual payments under the installment sale are $100,000 and are due on July 1. The first payment was made on July 1, 2014. Additional information follows:
• The amount that would be realized on an outright sale of similar farm machinery is $556,000.
• The cost of the farm machinery sold to Agriculture is $417,000.
• The finance charges relating to the installment period are $244,000 based on a stated interest rate of 12%, which is appropriate.
• Circumstances are such that the collection of the installments due under the contract is reasonably assured.

What income or loss before income taxes should Maple record for the year ended December 31, 2014, as a result of this transaction? Show supporting computations in good form.

  • CreatedSeptember 10, 2014
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