Hillary Co. is a cash basis taxpayer. It sold machinery for $300,000 during the year. Hillary Co. acquired the machinery for $100,000 and took $60,000 in depreciation prior to the sale. fte machinery is subject to a $30,000 liability. fte buyer assumes the liability, gives Hillary Co. a $60,000 down payment and agrees to pay
$70,000 per year for the next three years. What is Hillary Co.'s gross proﬁt percentage in the year of sale?

Question

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Zog Company must use the percentage-of-completion method to account for the contract as follows.
 11eb4b56_5197_69a5_acd1_9185bd40b3d3_TB1942_00 *2012: $21,000,000/$30,000,000 × $40,000,000 = $28,000,000 2013: $40,000,000 - $28,000,000 = $12,000,000