Question

VIQUISepon ZUIY Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Taylor Moore buys and sells real estate. On December 31, 2019, her inventory of property included a tract of undeveloped land for which she had paid $980,000. The fair market value of the land was $1,000,000 at that date. How much income should Moore report for 2019 in connection with this land? Income reported in connection with land < Required 1 Required 3 > rev 1 of 2 Next > Og e E

Answer 1

Solution:

Requirement 2:

Income to be reported in connection with land is $ 0 or Nil

Reason:

1) Land are recorded at historical cost and if it is adjusted, it should be lower of cost or market value.

2) In this question, Cost of land is a $ 980,000 and fair market value is $ 1,080,000. we have to consider cost and ignore fair value.

Requirement 3:

Income / Revenue from the project is $ 0 or Nil.

Reason:

1)As per revenue principal, income or revenue will be recognized when sales or service is actually preformed.

2) In this question, contract will be completed by 31st December 2020 and no work will be done on the project until January 2020. So, we have to recognize the revenue on December 2020.

3) Amount received from customer $ 1,080,000 on November 15,2019 will be treated as advance and liability but not as income.