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    Present Value of Note and Gain on Sale

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    On January 1, 2010, Fishbone Corp sold a building that cost $250,000 and had accumulated depreciation of 100,000 on the day of the sale. Fishbone received as consideration a 240,000 noninterest-bearing note due on January 1, 2013.

    There was no established exchange price for the building, and the note had no ready market. The prevailing rate of interest for a note of this type in January 1, 2010 was 9%. At what amount should the gain from the sale of the building be reported?

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    Solution Summary

    Given facts surrounding the sale of a building in return for a non-interest bearing note, this solution illustrates how to compute the gain on the sale.