Smythe Corporation is in the real estate development business. If they sell a piece of land for $50,000 that they had previously purchased for $45,000, they should record a loss of $5,000.

Question

Quizplus · Accepted Answer

The sale of the land would result in a gain of $5,000, not a loss of $5,000. The gain is calculated as the selling price ($50,000) minus the purchase price ($45,000), which equals $5,000.

Smythe Corporation Is in the Real Estate Development Business