Author Question: Kevin sold property with an adjusted basis of $58,000. The buyer assumed Kevin's existing mortgage ... (Read 443 times)

Yolanda · **on:** Sep 13, 2020

Question 1

In year 1 a contractor agrees to build a building for $2,500,000 by the end of year 2. The builder's cost is estimated to be $1,800,000. The actual costs year 1 are $900,000 and year 2's actual costs are $1,100,000. Under the percentage of completion method year 2's gross profit is
◦ $150,000.
◦ $500,000.
◦ $700,000.
◦ $350,000.

Question 2

Kevin sold property with an adjusted basis of $58,000. The buyer assumed Kevin's existing mortgage of $40,000 and agreed to pay an additional $60,000 consisting of a cash down payment of $40,000, and payments of $4,000, plus interest, per year for the next 5 years. Kevin paid selling expenses totaling $2,000. What is Kevin's gross profit percentage?
◦ 33 1/3%
◦ 40%
◦ 60%
◦ 66 2/3%

katara · **Reply #1 on:** Sep 13, 2020

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