Assume the following: Sales price and cost of a property are $$3,000,000$ and $$2,100,000,$ respectively, so that the total profit to be recognized is $$900,000.$ Seller received a down payment of $$400,000$ cash, with the remainder of the sales price to be received over a $10-$year period. There is significant doubt about the ability and commitment of the buyer to complete all payments.

How much profit will be recognized attributable to the down payment if the cost recovery method is used $($in dollars$)?$

Answer rating: 100% (QA)

In the cost recovery method profit is recognized based on the ratio of the cash rec... View the full answer