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On July 1, 2021, Apache Company, a real estate developer, sold a parcel of land to...

On July 1, 2021, Apache Company, a real estate developer, sold a parcel of land to a construction company for $3,080,000. The book value of the land on Apache’s books was $1,320,000. Terms of the sale required a down payment of $220,000 and 13 annual payments of $220,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2022.

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?

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Answer #1
Apache Company
1) Revenue is recognized at the time of transfer of land to the construction company
2) Revenue is recognized for $3080000.
3) Revenue recognized in 2021, in the books of Apache Company.
Revenue is recognized in case of real estate-
a) Risk and Reward are transferred.
b) Seller Does not take any control over goods transferred.
c) No uncertainity regarding collections.
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