Stanton Industrial sells machinery on the installment plan.On September 1,2014,Stanton entered into an installment sale contract with Saunders Productions for a six-year period.Equal annual payments under the installment sale are $187,500 and are due on August 31 of each year beginning in 2015.
Additional information:
(a)The cost of the machinery sold to Saunders was $637,500.
(b)The implicit interest rate on the installment sale is 10%.
Compute the income or loss before taxes that Stanton should record for the year ended December 31,2014,as a result of the above transaction,assuming that circumstances are such that the collection of the installments due under the contract
(1)is reasonably assured.
(2)cannot be reasonably assured.

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The Answer of Stanton Industrial sells machinery on the installment plan.On September 1,2014,Stanton entered into an installment sale contract with Saunders Productions for a six-year period.Equal annual payments under the installment sale are $187,500 and are due on August 31 of each year beginning in 2015.
Additional information:
(a)The cost of the machinery sold to Saunders was $637,500.
(b)The implicit interest rate on the installment sale is 10%.
Compute the income or loss before taxes that Stanton should record for the year ended December 31,2014,as a result of the above transaction,assuming that circumstances are such that the collection of the installments due under the contract
(1)is reasonably assured.
(2)cannot be reasonably assured.

Stanton Industrial Sells Machinery on the Installment Plan